Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: Liberty on July 31, 2015, 01:08:32 PM

Title: LILA - Liberty Global Latin America tracker
Post by: Liberty on July 31, 2015, 01:08:32 PM
So far we've been discussing LiLAC in the Liberty Global thread, but it's probably a good idea to break it off in its own thread going forward so it's easier to find what has been posted about each company :)

Here's the LBTYA thread for reference:

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lbtya-liberty-global/
Title: Re: LILA - Liberty Global Latin America tracker
Post by: eclecticvalue on July 31, 2015, 02:16:53 PM
I am intrigued by this. Since Latin America is an emerging economy and building an empire in the promising countries would be really good.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ItsAValueTrap on July 31, 2015, 09:15:07 PM
Has anybody looked at insider compensation?  I remember with LVNTA/LINTA, Malone was to receive Ventures options while everybody else received LINTA options.  So he seemed to favour LVNTA over LINTA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: meiroy on August 01, 2015, 01:03:01 AM

How would sovereign defaults in latin america impact this investment? Can J.M. handle it as well?

Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on August 03, 2015, 09:49:58 AM
http://www.benzinga.com/analyst-ratings/analyst-color/15/08/5727430/is-the-liberty-lilac-spin-off-worth-investing-in

"According to the Morgan Stanley report, “Management has stated that there is a long list of potential M&A candidates with a combined EBITDA opportunity of more than five times LiLAC's current size.

Equal-Weight For Now

However, the analyst believes that this positive outlook is already priced into the stock. While Liberty Global is a compelling long-term growth story, local organic FX growth is expected to slow down sharply in 2015-2016 to the mid-single digits, due to tougher competition in Chile, more difficult comps and the weaker Puerto Rico macro environment."
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on August 04, 2015, 03:44:57 PM
Q2 looking good at first glance:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Release-Q2-15-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on August 04, 2015, 03:47:46 PM

That operating leverage is kicking in.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 05, 2015, 12:06:16 PM
How is debt handled for tracking stocks? Are they borrowed and guaranteed under the Liberty Global parent as EURO currencies?
I am trying to figure out how the debt issue will be impacted by hyper inflation. Usually if they borrow the local currency and there is hyper inflation and they are able to pass the costs to clients, the real debt is actually decreasing quickly.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: meiroy on August 05, 2015, 06:55:51 PM
How is debt handled for tracking stocks? Are they borrowed and guaranteed under the Liberty Global parent as EURO currencies?
I am trying to figure out how the debt issue will be impacted by hyper inflation. Usually if they borrow the local currency and there is hyper inflation and they are able to pass the costs to clients, the real debt is actually decreasing quickly.

Hyper inflation will be followed by contagion and sovereign defaults. We have been to this movie before. Doesn't this bother you more?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 05, 2015, 08:29:45 PM
Here is my chicken scratch after going through the 10q.

I have 12.5M lila class A, 0.5M class B and 30M class C shares.   I have no idea what the share price of C shares is, the A is $42 and the B is $43  so roughly $1.8B mcap right there which is much higher than yahoo finance.  Still it's a new stock with a complicated structure so can anyone confirm the market cap?
 
Adjusted OIBDA % is around 41% while closer to 50% in Europe.  Not sure if that same ratio is possible here but given that it was at 39% last year likely they are not done yet.  OIBDA was $125m and $238m for last quarter and last 6 months.

I have $145M in debt payments, $220M in capex & $35m for derivatives in 2016.  So if OIBDA comes in at $500m, that is about $100m in FCF?  Maybe I am missing something else..

The 7.5% growth rate is organic (which is good) but net growth was only around 2%.  Not an issue by any means as margins are improving but just for clarity.

They attribute only $1.3M of share compensation expense to LILAC, $55M to global.  I think the rest of management expense would show under SG&A.

Regarding the debt they hold the Chilean debt local I think but have an currency thing (collar?) to compensate them if currency moves against them.   Chile is a pretty stable country too, I don't see hyper inflation as a risk.  Puerto Rico uses USD from my understanding, the debt is in USD there.

There is more but I don't feel like typing.  Honestly it looks attractive to me right now but then I am fairly easily sold when Malone is involved.   I will need to think about it for a week or so.   Interested to see other's opinions.  In particular I wonder what other's think of the valuation. 

Does anyone know Malone's stake in the company?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: meiroy on August 05, 2015, 11:45:13 PM
Here is my chicken scratch after going through the 10q.

I have 12.5M lila class A, 0.5M class B and 30M class C shares.   I have no idea what the share price of C shares is, the A is $42 and the B is $43  so roughly $1.8B mcap right there which is much higher than yahoo finance.  Still it's a new stock with a complicated structure so can anyone confirm the market cap?

B is the OTC LILAB while C is LILAK...  All about the same anyhow.



Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 06, 2015, 09:26:27 AM
How is debt handled for tracking stocks? Are they borrowed and guaranteed under the Liberty Global parent as EURO currencies?
I am trying to figure out how the debt issue will be impacted by hyper inflation. Usually if they borrow the local currency and there is hyper inflation and they are able to pass the costs to clients, the real debt is actually decreasing quickly.

Hyper inflation will be followed by contagion and sovereign defaults. We have been to this movie before. Doesn't this bother you more?

http://www.tradingeconomics.com/chile/government-debt-to-gdp

The debt to gdp ratio seems very low to me.

http://www.reuters.com/article/2014/12/04/chile-bonds-finmin-idUSL2N0TN1YS20141204
"Dec 3 (Reuters) - Chile raised $2 billion via a double bond placement on Wednesday, which Finance Minister Alberto Arenas said was the country's biggest sovereign issue since it returned to democracy and international debt markets in 1990."

Seems like it was blocked from international debt market since 1990. Therefore most of its current government debt is local. Therefore inflation actually helps more than hurt.
I think there is a possibility to have the classic boom-bust cycle. They just got access to international debt market. They can borrow money to boost their economy. Then GDP grows, making the debt to GDP ratio low. Therefore they can borrow more...... Eventually the cycle will go into the other direction, but right now since they just got international debt access, it should be in the early stages of the boom bust cycle.

Another question for all of you who likes LILA, could you please let me know why you think LILA is cheap?
"Giving pro forma effect to the OCF impact of the Choice transaction, the LiLAC Group ended Q2 2015 with adjusted gross and net leverage ratios of 3.9x and 3.5x, respectively. These ratios take into account the impact of a cross-currency derivative that synthetically swaps VTR Finance B.V.'s $1.4 billion debt into CLP 760.3 billion."

What does this mean? Does this mean they hedged the currency risk for their debt?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 09:54:59 AM
muscleman,

You really should read the 10-q if you want to know the details, it is all in there somewhere.   My take is that the chilean debt is in USD but if you look they have derivatives that offset currency risk.

I don't think it is crazy cheap but at something like 16-17x fcf there is very little growth priced in.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 06, 2015, 10:40:24 AM
Why are you focusing on FCF? In my opinion, this is the wrong metric for a cable co with such a strong growth perspective. You should focus on EBITDA because LILA is going to put most of its cash directly into growth capex. This is low FCF by choice.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 10:47:23 AM
Ni-co, I agree. :)   But the beauty of the valuation is that you can justify it, I think, based on fcf even if you assume prior capex has been all maintenance.   I think you are getting growth for free.   I suspect this might be the case because the assets are in countries that scare investors and perhaps for good reason.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 06, 2015, 10:56:14 AM
You are not getting growth for free at these FCF multiples. You're paying roughly 30x FCF / share at these prices. There is a significant M&A premium embedded into the stock. I think it's kind of crazy to put meaningful sums of money to work without truly understanding what you're investing in or how much FCF an asset actually produces.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 11:01:57 AM
Fa,

What FCF figure do you have and how did you arrive at it?

My numbers for 2016 are $500m OIBDA, less: 145m debt, 220m capex, 35m derivatives.   Also, this feels conservative to me.  I think some of the capex is for growth and OIBDA could overshoot.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on August 06, 2015, 11:03:24 AM
You are not getting growth for free at these FCF multiples. You're paying roughly 30x FCF / share at these prices. There is a significant M&A premium embedded into the stock. I think it's kind of crazy to put meaningful sums of money to work without truly understanding what you're investing in or how much FCF an asset actually produces.

FCF is about at a $4/share run rate once you normalize for maintenance capex and their FX hedging. If you don't believe the FX swings won't stabilize over the next 15-20yrs then this isn't something to be in.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 06, 2015, 12:32:45 PM
I'm at roughly $1.40 of FCF / share. Chile EBITDA: $330, 60% of Puerto Rico EBITDA: $120, Chile + 60% of Puerto Rico Capex: $200, Interest Expense: $150, Corporate Expense: $8.5mm, Share Based Comp: $5, Cash Taxes: $40mm. Gets you to roughly $55mm or $1.40 in FCF / share.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 01:04:52 PM
Thanks fa.  I didn't see a breakout of taxes in the 10q so just assumed they weren't paying them.   I would get about $60m+ if $40m taxes were subtracted.   That definitely hurts the thesis.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 01:22:48 PM
I looked through the 10-Q and have just no idea where you are getting the $40m income tax from.  I see lilac as having a $1.4m income tax BENEFIT in the most recent quarter. Look at page 103 of the latest 10q.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 06, 2015, 02:02:20 PM
LILA won't pay a meaningful amount of taxes for a very long time. After all, this is Malone's model: rather paying interest than taxes.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: pantheman on August 06, 2015, 02:05:52 PM
Does anyone have an explanation as to why LILAK trades at a premium to LILA? Seems all the other Liberty tracking stocks have an inverse relationship between voting and non-voting stock.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on August 06, 2015, 02:38:06 PM
Does anyone have an explanation as to why LILAK trades at a premium to LILA? Seems all the other Liberty tracking stocks have an inverse relationship between voting and non-voting stock.

More liquidity?

I converted to LILA from LILAK (also means I have 1 position less on the screen)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 06, 2015, 03:32:45 PM
What's important isn't GAAP taxes but cash taxes. They're a meaningful cash tax payer. 6 months ended June 30, 2015 they paid $14.4mm in taxes (see page F-11 http://www.sec.gov/Archives/edgar/data/1570585/000157058515000159/lg-201563015xex_991xtracker.htm). In 2014 they paid $37.4mm in cash taxes.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 06, 2015, 03:50:30 PM
Thanks fa.   Based on that I think that a) I don't understand the financials and b) what I understand of the financials indicates it is not cheap.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: orion on August 07, 2015, 01:47:46 AM
Over time both the cash tax and GAAP tax amounts will be equal. From my understanding, cash taxes are determined on a current year basis, tax liabilities reflected on a company’s financial statements include both current and future year tax liabilities. If this is true, doesn´t this mean LILA will have to pay a lower cash tax amount in the future? But I´m no expert in this matter.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 07, 2015, 05:34:28 AM
VTR should continue to be a meaningful cash tax payer as they have exhausted all their NOLs and do not have any Shields from depreciation
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 07, 2015, 08:12:37 AM
Regarding currency hedges, it seems like LILA only has hedge for the debt, no hedges for the revenue?
http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10841078-1033-633094&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLBTYA


( 4 )     Derivative Instruments

In general, we seek to enter into derivative instruments to protect against (i) increases in the interest rates on our variable-rate debt and (ii) foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity. In this regard, through our subsidiaries, we have entered into various derivative instruments to manage interest rate exposure and foreign currency exposure with respect to the U.S. dollar ( $ ), the euro ( € ), the British pound sterling ( £ ), the Swiss franc ( CHF ), the Chilean peso ( CLP ), the Czech koruna ( CZK ), the Hungarian forint ( HUF ), the Polish zloty ( PLN ) and the Romanian lei ( RON ). With the exception of a limited number of our foreign currency forward contracts, we do not apply hedge accounting to our derivative instruments. Accordingly, changes in the fair values of most of our derivative instruments are recorded in realized and unrealized gains or losses on derivative instruments, net, in our condensed consolidated statements of operations.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rpadebet on August 07, 2015, 09:04:54 AM
I think some very important points are discussed in this thread..

Here is my 2 cents

1. I think this is trading somewhere between 20-25x FCF currently.
2. That is not traditionally cheap but not super expensive either considering their previous playbook and runway here
3. There is growth and M&A premium built it, but how much depends on your view of interest rates/inflation/regulation in the part of the world they operate in
4. Cash taxes are the correct metric to use, but not historic. Need to use estimates of future cash taxes. I believe, GAAP and cash do converge over time.
5. Even if Revenues aren't hedged, most expenses are also in the same currency, so the currency exposure is actually limited to FCF to equity

Bottom line is, the investment thesis depends heavily on
1) how good they are at repeating the playbook the third time over
2) how long of a view you can take to wait for them to run the playbook successfully

I think by investing here, you are getting in close to the ground floor and if you can wait 5-10 years, there is a high probability this will be a big multi-bagger given the quality of the operators and business model.

The risk to equity is of course FX and regulatory stability in the countries they operate in.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 07, 2015, 09:07:39 AM
Does anyone understand the differences between "Net cash provided by operating activities of our continuing operations" and their own definition of OCF?

Operating Cash Flow Definition and Reconciliation

As used herein, OCF has the same meaning as the term "Adjusted OIBDA" that is referenced in our 10-Q. OCF is the primary measure used by our chief operating decision maker to evaluate segment operating performance. OCF is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, OCF is defined as operating income before depreciation and amortization, share-based compensation, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items. Other operating items include (a) gains and losses on the disposition of long-lived assets, (b) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (c) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe OCF is a meaningful measure and is superior to available GAAP measures because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between segments and (3) identify strategies to improve operating performance in the different countries in which we operate. We believe our OCF measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. OCF should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings or loss, cash flow from operating activities and other GAAP measures of income or cash flows. A reconciliation of total segment operating cash flow to our operating income is presented below.


In this SEC filing, their OCF is 128 million per quarter for LILA, but much smaller in GAAP's "Net cash provided by operating activities of our continuing operations".

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10841724-5297-133087&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLBTYA
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 07, 2015, 09:57:08 AM
The tax question is really quite theoretical here. Take a look at how much tax LBTYA has paid for the last 5 years (cash or GAAP) compared to their operating earnings. Tax paid by VTR in the past doesn't matter either, because this is hugely dependent on how a company is managed and if they really optimize for it.

It boggles my mind that Malone's management teams belong to the very view that realize how much money is being wasted by running your company too profitable. Of course, you need to have the choice to optimize this by having high ROI investment opportunities to pour your cash flows into. Not every company can do that. But Malone tries to structure his companies in a way that they get this choice.

There is a huge economic difference between cash tax paid and GAAP tax because cash tax paid is money that went out the door and, therefore, can't compound for you. Tax deferral is an interest free loan – this is money that can work for you while you don't pay it. So, this is not a zero sum game. If managed the right way the two should never converge as long as your company keeps on living.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on August 07, 2015, 10:15:10 AM
I'm at roughly $1.40 of FCF / share. Chile EBITDA: $330, 60% of Puerto Rico EBITDA: $120, Chile + 60% of Puerto Rico Capex: $200, Interest Expense: $150, Corporate Expense: $8.5mm, Share Based Comp: $5, Cash Taxes: $40mm. Gets you to roughly $55mm or $1.40 in FCF / share.

I'm looking at their cash flow statement and I'm getting different numbers than you are. Take their net earnings + D&A. Annualize the amount and subtract out ~85mm for maintenance capex. This is backwards looking as every new customer they add to their current system will expand their margins going forward. What makes this model powerful is their ability to acquire new cable systems with just incremental debt since they will be deleveraging each quarter from organic growth.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on August 07, 2015, 10:24:04 AM
I'm at roughly $1.40 of FCF / share. Chile EBITDA: $330, 60% of Puerto Rico EBITDA: $120, Chile + 60% of Puerto Rico Capex: $200, Interest Expense: $150, Corporate Expense: $8.5mm, Share Based Comp: $5, Cash Taxes: $40mm. Gets you to roughly $55mm or $1.40 in FCF / share.

I'm looking at their cash flow statement and I'm getting different numbers than you are. Take their net earnings + D&A. Annualize the amount and subtract out ~85mm for maintenance capex. This is backwards looking as every new customer they add to their current system will expand their margins going forward. What makes this model powerful is their ability to acquire new cable systems with just incremental debt since they will be deleveraging each quarter from organic growth.

Your PR EBITDA seems really low to me. Run-rate EBITDA excluding Choice is close to $150mm and Choice EBITDA with Synergies is around $45mm. How did you get the $200mm for capex? Does it exclude minority interest? Why did you assume $8.5mm in corp expense?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 07, 2015, 10:53:31 AM
Capex for lila was $110m in the last 6 months.  How do you get from there to $85m per year?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on August 07, 2015, 11:04:53 AM
Capex for lila was $110m in the last 6 months.  How do you get from there to $85m per year?

There's a difference between maintenance capex and growth capex. Net PP&E is 894mm. Do you really think they are turning over 20% of their base each year from total wear and tear??
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 07, 2015, 11:47:37 AM
I get that the $110m includes growth but they are only growing 7%.   IDK, I don't really have enough info to gauge how much of that is maintenance vs growth so I prefer to err on caution.   To say 60% of the total capex is so that the company can grow 7% well  .. that's possible but seems aggressive.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 16, 2015, 07:25:16 AM
I cannot figure out how to post a link directly to it, but if you go to underwater capital's twiter feed https://twitter.com/chalkbaggery there is a great little table on LILA.  It includes historical and forecast numbers from 2014 through to 2018.   It includes FCF & EBITDA plus numerous other metrics.

In particular they have FCF yield for 2015 coming in around 5.5% or 19x, and EV/EBITDA at 7.9x.   Based on these calculations he is coming up with a $71 price target in 2018 based on modest organic growth (looks like 5%-ish per year), no acquisitions, margins gradually improving from 40% to 42%, and a terminating EV/EBITDA around 9x.   I think it is a great summary for those trying to decide whether to do the analysis but obviously you will want to check the numbers.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 17, 2015, 04:27:19 AM
I cannot figure out how to post a link directly to it, but if you go to underwater capital's twiter feed https://twitter.com/chalkbaggery there is a great little table on LILA.  It includes historical and forecast numbers from 2014 through to 2018.   It includes FCF & EBITDA plus numerous other metrics.

In particular they have FCF yield for 2015 coming in around 5.5% or 19x, and EV/EBITDA at 7.9x.   Based on these calculations he is coming up with a $71 price target in 2018 based on modest organic growth (looks like 5%-ish per year), no acquisitions, margins gradually improving from 40% to 42%, and a terminating EV/EBITDA around 9x.   I think it is a great summary for those trying to decide whether to do the analysis but obviously you will want to check the numbers.

The direct link to this tweet: https://twitter.com/chalkbaggery/status/632196385996177408
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 17, 2015, 11:24:57 AM
It looks like lilak is now trading cheaper than lila.   About 1% at this point.  However looking at LBTYA vs LBTYK it looks like the K series (c class?) is about 7 or 8% cheaper.   Does anyone have any thoughts on which is the safer class to hold?   I would prefer not to buy lilak now only to have it permanently adjust down to a 7% spread.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on August 17, 2015, 11:28:01 AM
It looks like lilak is now trading cheaper than lila.   About 1% at this point.  However looking at LBTYA vs LBTYK it looks like the K series (c class?) is about 7 or 8% cheaper.   Does anyone have any thoughts on which is the safer class to hold?   I would prefer not to buy lilak now only to have it permanently adjust down to a 7% spread.

Usually it's a good idea to switch to non voting on ~7% spread (I am anchoring here haha) and to voting at 0-3% spread. But that's "usually" and all that. You might just buy any class you like and fogetaboutit.

Edit: thanks for asking. I just switched my LBTYA to LBTYK. Let me know when the spread tightens ;)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on August 17, 2015, 12:26:00 PM
https://twitter.com/bluegrasscap/status/633106581496983552
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on August 17, 2015, 02:29:45 PM
Found via @BluegrassCap

Cable boost at heart of Millicom's Latin American ambitions
http://www.ft.com/intl/cms/s/0/87296d88-3092-11e5-8873-775ba7c2ea3d.html#axzz3j6jK9DMr
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 17, 2015, 03:17:01 PM
I don't have an FT login.  Anyone care to  give the TLDR?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: peluche on August 17, 2015, 03:39:14 PM
I don't have an FT login.  Anyone care to  give the TLDR?

This link should work:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAAahUKEwjftK30lbHHAhXBNYgKHVCRAkk&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F87296d88-3092-11e5-8873-775ba7c2ea3d.html&ei=3WDSVZ_SHMHroATQoorIBA&usg=AFQjCNEgaUjKztTWF9wFrT8-gPYQh9tQLQ&sig2=k30c6N_zPZO4TZgeQqiD3A&bvm=bv.99804247,d.cGU
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on August 18, 2015, 06:48:33 AM
Thanks for posting the story on Millicom.  In it there's mention of possible merger with Cable&Wireless that Malone owns a 13% stake in through their acquisition of Columbus International in 2014.  His ownership is in a private vehicle not LBTYA or LMCA.  Does this pose any issues with any of you?

Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 18, 2015, 07:18:33 AM
Thanks for posting the story on Millicom.  In it there's mention of possible merger with Cable&Wireless that Malone owns a 13% stake in through their acquisition of Columbus International in 2014.  His ownership is in a private vehicle not LBTYA or LMCA.  Does this pose any issues with any of you?



For those of us a bit slower, could you elaborate?  Do you see there being a conflict with LILA because they are in the same geographic area?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on August 18, 2015, 07:47:09 AM
Malone cos have had conflicts of interest between various parts for ages now. You either live with that or not. Yet another possible conflict of interest is not really news.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on August 18, 2015, 09:18:26 AM
Actually I wasn't sure, so was checking to see if anyone had followed Malone's investment in Columbus International.  I looks like C&W and LILA don't overlap.  If anything C&W would be a takeover candidate for LILA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on August 18, 2015, 10:57:06 AM
Actually I wasn't sure, so was checking to see if anyone had followed Malone's investment in Columbus International.  I looks like C&W and LILA don't overlap.  If anything C&W would be a takeover candidate for LILA.

Right. But even that could be considered conflict of interest.

As I said, if you invest in Malone cos, you have to live with that. :)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 18, 2015, 11:31:02 AM
Are people not worried with LILA about the puerto rico economy?  I know that macro is tough but it seems to be in a long-term decline both historically and forecasted.  The country has missed a debt payment, has net emigration, there are calls for leftist government, I don't see much to like.   Chile on the other hand is in a slump but I am fairly comfortable with.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on August 18, 2015, 11:33:37 AM
I've been on the other side of Malone in UCOMA.  But it pissed me off so much I sold out of LBTYA since the exchange ratio for UCOMA to LBTYA was a rip off.  I'm ready to live with it now.  :)

Actually I wasn't sure, so was checking to see if anyone had followed Malone's investment in Columbus International.  I looks like C&W and LILA don't overlap.  If anything C&W would be a takeover candidate for LILA.

Right. But even that could be considered conflict of interest.

As I said, if you invest in Malone cos, you have to live with that. :)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on August 18, 2015, 12:11:47 PM
Economy in PR is horrible (I'm from and live in PR), but LILA can take market share from Claro (DSL) which helps mitigate macro headwinds.  No currency risk with PR either.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: JoelS on August 18, 2015, 12:34:34 PM
Are people not worried with LILA about the puerto rico economy?  I know that macro is tough but it seems to be in a long-term decline both historically and forecasted.  The country has missed a debt payment, has net emigration, there are calls for leftist government, I don't see much to like.   Chile on the other hand is in a slump but I am fairly comfortable with.

I am. I may average into LiLac over time but, at least for me, the LiLac stock has been too popular given 1. serious economic instability in Puerto Rico, and Chile 2. The point in the cycle we are currently in, and how tracking stocks have historically performed in distressed markets 3. Currency instability in those markets given Lilac has to hedge.

I understand the no-macro approach, but I worry that the macro may affect the micro in this case. Notwithstanding the attractive qualitative characteristics of cable.

Long term I think there is real promise for Lilac, but if I miss out on the gains in the time it takes me to understand the underlying dynamics, and get comfortable with the business - all good.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 18, 2015, 02:02:02 PM
I am, too – with EM as a whole. I shorted EEM against my LILA. And it's even only half the LILA position because I think/hope I might get the other half much cheaper because of the global macro environment.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: frommi on August 18, 2015, 08:41:54 PM
Isn`t your internet connection the last thing you cut in case you lose your job? Is this is different in PR or Chile?
I am more worried about the strong USD, but since i am already long USD i see LILA as a currency diversification.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 19, 2015, 07:09:33 AM
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 19, 2015, 07:16:56 AM
There are costs to the hedging, even if currency rates stay constant.   I think he hedges the debt because a currency move, even short-term, could lead to financial problems but otherwise he just gambles on the the currency.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: DeepSouth on August 19, 2015, 07:25:09 AM
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

He's hedging VTR's USD debt (easier to issue) against the entity's operating currency (CLP) through swaps. That's simple ALM for the firm's cash flows. The firm's OCF/FCF is unknown and variable. Attempting to hedge OCF into dollars could put you at a large competitive disadvantage if a currency move went against you - that's really speculation not hedging.

Hedging the debt lowers financial risks for the firm, "hedging" OCF increases risk to the firm.

Shareholders are free to attempt to hedge out currency exposure if they wish.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: abitofvalue on August 19, 2015, 07:33:42 AM
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

they say they use hedges to minimize the impact of "foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity"

My understanding is that as a borrower you want to end up with debt payments in the same currency as your revenues / CFs.  You can achieve this by either converting your revenues earned in currency X to the currency of your borrowing currency Y.  Or you can convert your borrowings in Y into X.  You also want to know what those debt payments will be so you can plan your business.  Since you don't know the exchange rate in the future, you use currency hedges to achieve this.  But you only need to convert one - either revenues or debt payments to end up with the same currency for both. Since debt payments are more definite and known, it is easier to hedge debt payments than revenue (notional amount of the contract).



Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 20, 2015, 06:32:11 AM
It looks like we will get a big chance to load up on LILA. There are more and more signs of an EM crisis driven by the strong USD. There are very good reasons for worrying. Yet, this is exactly why Malone & Co. hedge the debt payments of LILA. I think there's going to be blind selling before market participants are going to recognize that there are hedged companies with strong balance sheets and the rest.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Yours Truly on August 20, 2015, 06:45:14 AM
I was fully anticipating a massive sell-off in this due to the sheer size ($1 billion vs LBTYA) and uncertainty of EM's.  I hope it has finally arrived.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 20, 2015, 06:47:42 AM
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

they say they use hedges to minimize the impact of "foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity"

My understanding is that as a borrower you want to end up with debt payments in the same currency as your revenues / CFs.  You can achieve this by either converting your revenues earned in currency X to the currency of your borrowing currency Y.  Or you can convert your borrowings in Y into X.  You also want to know what those debt payments will be so you can plan your business.  Since you don't know the exchange rate in the future, you use currency hedges to achieve this.  But you only need to convert one - either revenues or debt payments to end up with the same currency for both. Since debt payments are more definite and known, it is easier to hedge debt payments than revenue (notional amount of the contract).

Why do you think hedging the OCF is difficult? This is a very stable business. Right now they have hedges to sell the USD.CLP pair that covers their debt service. They can simply increase it by 400M USD size to also cover the OCF. It won't cover 100% of their OCF but a majority of it.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on August 20, 2015, 07:21:32 AM
I would have assumed that spinoff dynamics (e.g. blind selling of the smaller company) wouldn't apply to a malone entity but perhaps I was wrong.   However, at the same time I wonder if it wasn't just priced too high.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: frommi on August 20, 2015, 07:27:47 AM
They can simply increase it by 400M USD size to also cover the OCF. It won't cover 100% of their OCF but a majority of it.

For 1 year, yes. And after that year?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on August 20, 2015, 07:32:39 AM
They can simply increase it by 400M USD size to also cover the OCF. It won't cover 100% of their OCF but a majority of it.

For 1 year, yes. And after that year?

What do you mean? Are you saying that their OCF will decline sharply after 1 year?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: frommi on August 20, 2015, 07:53:42 AM
What do you mean? Are you saying that their OCF will decline sharply after 1 year?

That depends on the currency rate after that year.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: DeepSouth on August 20, 2015, 08:01:30 AM
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

they say they use hedges to minimize the impact of "foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity"

My understanding is that as a borrower you want to end up with debt payments in the same currency as your revenues / CFs.  You can achieve this by either converting your revenues earned in currency X to the currency of your borrowing currency Y.  Or you can convert your borrowings in Y into X.  You also want to know what those debt payments will be so you can plan your business.  Since you don't know the exchange rate in the future, you use currency hedges to achieve this.  But you only need to convert one - either revenues or debt payments to end up with the same currency for both. Since debt payments are more definite and known, it is easier to hedge debt payments than revenue (notional amount of the contract).

Why do you think hedging the OCF is difficult? This is a very stable business. Right now they have hedges to sell the USD.CLP pair that covers their debt service. They can simply increase it by 400M USD size to also cover the OCF. It won't cover 100% of their OCF but a majority of it.

Swapping OCF into USD increases financial risks to the firm (it's not hedging, it's speculation). What if CLP climbs 50% on the USD? You've just locked yourself into USD OCF but are now paying CapEx in 50% appreciated CLP, potentially putting you at solvency risk. These are just the 1st level effects of such a move; complex systems are harder to predict.

You are effectively suggesting the creation of a currency mismatch. You are free to do this against your security if you want to speculate on currencies, but it makes little sense to do it from management's standpoint IMO. I don't think JM would say this is where his skillset lies anyway.

Hedging the debt into CLP lowers risk by matching the currency of the assets to the currency of the liability.

I certainly may be misconstruing something, but this is how I see it.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 20, 2015, 08:25:34 AM
I would have assumed that spinoff dynamics (e.g. blind selling of the smaller company) wouldn't apply to a malone entity but perhaps I was wrong.   However, at the same time I wonder if it wasn't just priced too high.

I think the recent sell-off has nothing to do with LILA. LILA is down with EEM 1:1. This is an EM sell-off and that's also why I expect it to continue.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: BraveChieftain on August 20, 2015, 09:11:28 AM
Probably some incremental selling based on macro risk in Chile given what's going on with China/commodities. On another note, does anyone have a view on whether they'll be able to eventually bring their cost of financing lower? I think on a swapped basis, the VTR notes are at ~7% and LBTY has a weighted average ~5% cost of debt in Europe. Lilac definitely looks attractive on an EV/EBITDA basis, but if they have structurally higher financing costs, maybe this is deserved.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: jay21 on August 20, 2015, 10:13:40 AM
Probably some incremental selling based on macro risk in Chile given what's going on with China/commodities. On another note, does anyone have a view on whether they'll be able to eventually bring their cost of financing lower? I think on a swapped basis, the VTR notes are at ~7% and LBTY has a weighted average ~5% cost of debt in Europe. Lilac definitely looks attractive on an EV/EBITDA basis, but if they have structurally higher financing costs, maybe this is deserved.

At a 40% tax rate you are talking 4.2% vs 3% or 120bps difference in after tax cost of debt. Assuming 50/50 mix debt and equity it's a 60 bp difference in total WACC. Concerning? Not for me.

FCF is just gravy if you really believe they can grow EBITDA and acquire cable systems because of the increase in net debt driving FCFE.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on August 20, 2015, 10:27:00 AM
LILA (bars) vs. EEM from 2nd July (first day of trading) until today.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: BraveChieftain on August 20, 2015, 11:12:44 AM
Mix of debt/equity is higher and ability to borrow at cheap rates has a big impact as they are going to look to do a lot of deals.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 20, 2015, 11:31:47 AM
VTR's cost of debt is 11% on a swapped basis.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: BraveChieftain on August 20, 2015, 12:20:51 PM
Right sorry, was meant to say ~7% non-swapped. Either way, I think it's a pretty meaningful thing to consider when valuing the equity.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on August 20, 2015, 12:37:51 PM
Definitely meaningful and a significant impact on how much the equity is worth.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on August 25, 2015, 05:51:48 AM
Was anybody able to attend or have notes? http://www.cfachicago.org/apps/eve_detail.asp?eve_ID=988
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on August 28, 2015, 04:52:50 PM
http://clarkstreetvalue.blogspot.ca/2015/08/lilac-group-liberty-globals-new-tracker.html
Title: Re: LILA - Liberty Global Latin America tracker
Post by: abitofvalue on August 28, 2015, 08:21:15 PM
While I am long and considering adding more, given the recent declines... One thing to consider - Malone's stake in CWC is greater $ than in LILA so if the end game is a transaction with CWC, you may not necessarily be on the same side as Malone.  That said, the stock does appear to be trading at pretty attractive multiples, if you think management is superior.


Title: Re: LILA - Liberty Global Latin America tracker
Post by: namo on September 11, 2015, 12:58:00 PM
FYI, LILAK is trading close to 1$ above LILA. I made the switch.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on September 11, 2015, 08:21:16 PM
FYI, LILAK is trading close to 1$ above LILA. I made the switch.

I've been buying LILA all the way from the beginning. Never understood why LILA is either less than LILAK or is only marginally more expensive.

Maybe some big funds were buying this hand over feast and LILAK has much better liquidity for them to accumulate the positions?  ::)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Hubris on September 15, 2015, 03:47:38 PM
A couple of analyst price target cuts. Anybody have any idea why? Dos anyone also have analyst reports on this?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fa21212 on September 15, 2015, 04:02:23 PM
They cut the price targets because the stock price went down. Sell side at its best.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on October 22, 2015, 08:47:03 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 06, 2015, 04:17:46 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone is so smart. When they announced the tracking stock I asked myself why Malone didn't raise his exposure to it when it really was such a great growth opportunity. Well, here we are and he'll even get paid for it to do so. There is close to zero chance that this takeover won't take place and JM not ending up with a hugely grown LILA stake. I would be very – very – suprised if the purchase price didn't include a large stock component – maybe they'll even raise more equity for the takeover. Owning CWC might be a smart move for anybody wanting to acquire more LILA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 06, 2015, 04:34:52 AM
Q3 is out: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-15-FINAL.pdf

Looks like they brought down their borrowing cost significantly. Fully-swapped borrowing cost for LILA is now down 230 bps to 6.4%. Sounds almost too good to be true.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 06, 2015, 05:12:02 AM
Q3 is out: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-15-FINAL.pdf

Looks like they brought down their borrowing cost significantly. Fully-swapped borrowing cost for LILA is now down 230 bps to 6.4%. Sounds almost too good to be true.

It's not really my area, so I'm not 100% clear on how this works, but it appears that the decreased rate comes with an increased nominal exposure.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: giofranchi on November 06, 2015, 06:41:28 AM
I have just sold some Liberty Broadband and added some new cash to buy some LILAK.
Is it good diversification, or "diworsification"?

Cheers,

Gio
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on November 07, 2015, 09:58:45 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone is so smart. When they announced the tracking stock I asked myself why Malone didn't raise his exposure to it when it really was such a great growth opportunity. Well, here we are and he'll even get paid for it to do so. There is close to zero chance that this takeover won't take place and JM not ending up with a hugely grown LILA stake. I would be very – very – suprised if the purchase price didn't include a large stock component – maybe they'll even raise more equity for the takeover. Owning CWC might be a smart move for anybody wanting to acquire more LILA.

I think you are on to something here.

I’m thinking about selling my LILA shares in my taxable account to recognize the ST loss and move the proceeds into CWC. Malone owns a big chunk of CWC and I have a feeling he launched the LILA tracking stock hoping for it to become undervalued and using it as a vehicle to transfer his ownership in CWC for a disproportionate stake in LILA. Since LILA is still technically part of Liberty Global I'm guessing he can shuffle the balance sheet a bit in his favor as well before officially spinning it off.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: jay21 on November 07, 2015, 11:34:26 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone is so smart. When they announced the tracking stock I asked myself why Malone didn't raise his exposure to it when it really was such a great growth opportunity. Well, here we are and he'll even get paid for it to do so. There is close to zero chance that this takeover won't take place and JM not ending up with a hugely grown LILA stake. I would be very – very – suprised if the purchase price didn't include a large stock component – maybe they'll even raise more equity for the takeover. Owning CWC might be a smart move for anybody wanting to acquire more LILA.

I think you are on to something here.

I’m thinking about selling my LILA shares in my taxable account to recognize the ST loss and move the proceeds into CWC. Malone owns a big chunk of CWC and I have a feeling he launched the LILA tracking stock hoping for it to become undervalued and using it as a vehicle to transfer his ownership in CWC for a disproportionate stake in LILA. Since LILA is still technically part of Liberty Global I'm guessing he can shuffle the balance sheet a bit in his favor as well before officially spinning it off.

I don't think Malone will push through an unfair deal in his benefit so I don't have much of an incentive to switch. If it is cash/stock and CWC gets bought, we may have to pay taxes on the cash portion.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ZenaidaMacroura on November 07, 2015, 03:52:26 PM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone is so smart. When they announced the tracking stock I asked myself why Malone didn't raise his exposure to it when it really was such a great growth opportunity. Well, here we are and he'll even get paid for it to do so. There is close to zero chance that this takeover won't take place and JM not ending up with a hugely grown LILA stake. I would be very – very – suprised if the purchase price didn't include a large stock component – maybe they'll even raise more equity for the takeover. Owning CWC might be a smart move for anybody wanting to acquire more LILA.

There's not even a price yet right?  Cwc is up 20+% Is there any indication or precedent for the premium or component of stock  the deal will be?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 08, 2015, 06:36:57 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone is so smart. When they announced the tracking stock I asked myself why Malone didn't raise his exposure to it when it really was such a great growth opportunity. Well, here we are and he'll even get paid for it to do so. There is close to zero chance that this takeover won't take place and JM not ending up with a hugely grown LILA stake. I would be very – very – suprised if the purchase price didn't include a large stock component – maybe they'll even raise more equity for the takeover. Owning CWC might be a smart move for anybody wanting to acquire more LILA.

There's not even a price yet right?  Cwc is up 20+% Is there any indication or precedent for the premium or component of stock  the deal will be?


The rumored price is 85p per share but there's certainly some risk involved that the deal doesn't go through at this price:

Quote
Liberty Global, the owner of Virgin Media, is in talks to take over Cable & Wireless Communications (CWC) in a deal that could value the Caribbean focused telecoms group at nearly £4bn.

Shares in CWC jumped 21 per cent to end at 71p, valuing it at £3.1bn, amid reports that Liberty could offer about £3.7bn in cash and stock, or about 85p a share. It would also take on CWC’s debt of about £2.6bn.

http://www.independent.co.uk/news/business/news/cable-wireless-in-37bn-bid-talks-with-liberty-global-a6705231.html

I don't think that Malone will push through an unfair deal. My guess is that LILA is going to pay a fair price for CWC. That doesn't mean that he won't use the low LILA stock price to his advantage, though. If I were as huge a CWC shareholder as he is, behind the scenes, I would push hard to do a deal with as small a cash component as possible – maybe even an all share offer? LILA share price aside, for tax reasons alone that's the way to go. Malone's tax base is way below mine so I'm trusting him, Fries and the others to structure this deal in an intelligent way.

That's one of the niceties of investing with Malone: You really can trust him doing stuff like this in an efficient way. There are great opportunities to create or destroy value for shareholders through acquisitions. He really has proven to be a guy who creates value through financial transactions.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 08, 2015, 08:42:14 AM
Q3 is out: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-15-FINAL.pdf

Looks like they brought down their borrowing cost significantly. Fully-swapped borrowing cost for LILA is now down 230 bps to 6.4%. Sounds almost too good to be true.

It's not really my area, so I'm not 100% clear on how this works, but it appears that the decreased rate comes with an increased nominal exposure.

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10993475-5248-143057&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLILA

"At September 30, 2015, the average tenor of our third-party debt attributed to the LiLAC Group was nearly eight years, with minimal maturities prior to 2022. Our blended fully-swapped borrowing cost of such debt was 6.4% at the end of Q3 2015, as compared to 8.7% at June 30, 2015. The reduction in our borrowing cost reflects the impact of a series of transactions that we undertook in our Chilean credit pool during Q3 2015, relating to a re-strike of a large portion of derivatives associated with our $1.4 billion principal amount of our senior secured notes. The net impact of these transactions resulted in a reduction in the annual swapped coupon (as noted above) that we pay going forward, with the notional amount of our leverage on a swapped basis increasing from CLP 760 billion to CLP 911 billion.

As a result of the re-strike, the gross and net leverage ratios associated with the debt attributed to the LiLAC Group increased to 4.4x and 3.9x, respectively, as compared to adjusted ratios of 3.9x and 3.5x in Q2 2015, respectively, after giving pro forma effect to the OCF impact of the Choice transaction."


What's the rational of doing this transaction? It makes the leverage ratio worse. The only "benefit" is that yearly interest payment is down from 66.1 bn to 58.2 bn, but after 8 years, they need to pay 151 bn more debt. So they end up having to pay more.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: abitofvalue on November 08, 2015, 08:57:39 AM
Let's not kid ourselves - Malone may create value for shareholders but he is going to look out for No. 1 first. His history taking advantage of shareholders to ensure he and his guys get paid is quite extensive. Anyone who has read cable cowboy or followed his career can see the dramatic difference in returns Malone himself has earned vs what public shareholders have earned. That said, his shareholder returns are absolutely impressive and I do think LILA offers a great opportunity to partner with his team as it does to latin america cable what it did in Europe with liberty.  But don't fool yourself thinking he is going to treat you fairly or as he treats his own holdings.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: jay21 on November 08, 2015, 09:21:18 AM
Let's not kid ourselves - Malone may create value for shareholders but he is going to look out for No. 1 first. His history taking advantage of shareholders to ensure he and his guys get paid is quite extensive. Anyone who has read cable cowboy or followed his career can see the dramatic difference in returns Malone himself has earned vs what public shareholders have earned. That said, his shareholder returns are absolutely impressive and I do think LILA offers a great opportunity to partner with his team as it does to latin america cable what it did in Europe with liberty.  But don't fool yourself thinking he is going to treat you fairly or as he treats his own holdings.

Can you list examples of his unfair dealings? I think I have an idea of some; just want to see if I missed any. Thanks
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on November 08, 2015, 09:44:07 AM
Let's not kid ourselves - Malone may create value for shareholders but he is going to look out for No. 1 first. His history taking advantage of shareholders to ensure he and his guys get paid is quite extensive. Anyone who has read cable cowboy or followed his career can see the dramatic difference in returns Malone himself has earned vs what public shareholders have earned. That said, his shareholder returns are absolutely impressive and I do think LILA offers a great opportunity to partner with his team as it does to latin america cable what it did in Europe with liberty.  But don't fool yourself thinking he is going to treat you fairly or as he treats his own holdings.

Can you list examples of his unfair dealings? I think I have an idea of some; just want to see if I missed any. Thanks

Liberty Media's spinoff of Liberty Global screwed UCOMA shareholders on the exchange by undervaluing significantly UCOMA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 08, 2015, 10:45:29 AM
I heard John Malone was treating shareholders fairly until he saw all of his buddies were doing worst than he did but became richer, so he structured the TCI deal to spin off Liberty Media.

They have until November 19th to get the details of the offer to buy CWC out. CWC trades at a much higher EV/EBITDA multiple than LILA. I would be pissed if the deal is an all stock deal to exchange undervalued LILA with overvalued CWC.

Does anyone know Malone's voting power on this matter? I think he has ways to force an unfair deal. The only question is whether he would use that power.

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10841078-1033-633094&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLILA

"Holders of LiLAC Ordinary Shares will have separate voting rights only on a limited set of matters and could be outvoted by holders of Liberty Global Ordinary Shares on all other matters. Holders of Liberty Global Ordinary Shares and LiLAC Ordinary Shares will vote together as a single class, except in certain limited circumstances prescribed by our new articles or as required by English law. Each Class B ordinary share of each group will have ten votes, and each Class A ordinary share of each group will have one vote. Holders of Class C ordinary shares of each group will have no voting rights at general meetings of the company or meetings of all of the shares relating to one group. When holders of Liberty Global Ordinary Shares and LiLAC Ordinary Shares vote together as a single class, holders having a majority of the votes (or 75%, in the case of a vote requiring a special resolution) present and voting will be in a position to control the outcome of the vote even if the matter involves a conflict of interest among our shareholders or has a greater impact on one group than the other. As of July 1, 2015, the date of the distribution of the LiLAC Ordinary Shares, holders of Liberty Global Ordinary Shares collectively directed approximately 95% of the aggregate voting power in our company, and holders of LiLAC Ordinary Shares collectively directed approximately 5% of the aggregate voting power in our company."
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 08, 2015, 11:29:25 AM
CWC's 2015 first 6 months EBITDA: 427 M dollars. Let's assume 850 Mn per year EBITDA.
Current long term debt: 2.8 bn.
If acquired at 5 bn market cap, the EV/EBITDA ratio is 9.17x.

LILA's current market cap is 1.6 bn. Debt: 2.3 bn. EBITDA is not able to be found. Adjusted OIBDA number is $127 per quarter, so about 500 mn per year. My understanding is that adjusted OIBDA is somewhat equivalent to adjusted EBITDA. Please let me know if I am wrong.
So the EV/EBITDA ratio is approximately 8x.

I would argue that this may be a somewhat fair value deal with CWC. We won't know until we see the offer terms.


Title: Re: LILA - Liberty Global Latin America tracker
Post by: yitech on November 08, 2015, 05:05:22 PM
Q3 is out: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-15-FINAL.pdf

Looks like they brought down their borrowing cost significantly. Fully-swapped borrowing cost for LILA is now down 230 bps to 6.4%. Sounds almost too good to be true.

It's not really my area, so I'm not 100% clear on how this works, but it appears that the decreased rate comes with an increased nominal exposure.

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10993475-5248-143057&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLILA

"At September 30, 2015, the average tenor of our third-party debt attributed to the LiLAC Group was nearly eight years, with minimal maturities prior to 2022. Our blended fully-swapped borrowing cost of such debt was 6.4% at the end of Q3 2015, as compared to 8.7% at June 30, 2015. The reduction in our borrowing cost reflects the impact of a series of transactions that we undertook in our Chilean credit pool during Q3 2015, relating to a re-strike of a large portion of derivatives associated with our $1.4 billion principal amount of our senior secured notes. The net impact of these transactions resulted in a reduction in the annual swapped coupon (as noted above) that we pay going forward, with the notional amount of our leverage on a swapped basis increasing from CLP 760 billion to CLP 911 billion.

As a result of the re-strike, the gross and net leverage ratios associated with the debt attributed to the LiLAC Group increased to 4.4x and 3.9x, respectively, as compared to adjusted ratios of 3.9x and 3.5x in Q2 2015, respectively, after giving pro forma effect to the OCF impact of the Choice transaction."


What's the rational of doing this transaction? It makes the leverage ratio worse. The only "benefit" is that yearly interest payment is down from 66.1 bn to 58.2 bn, but after 8 years, they need to pay 151 bn more debt. So they end up having to pay more.

If you compare the difference of the interest payment annuities and the PV of extra notional and assume constant USD/CLP exchange rates using 6-8% to discount, the difference overall is negative $7-17M USD. So it's not really material.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: yitech on November 08, 2015, 05:19:39 PM
CWC's 2015 first 6 months EBITDA: 427 M dollars. Let's assume 850 Mn per year EBITDA.
Current long term debt: 2.8 bn.
If acquired at 5 bn market cap, the EV/EBITDA ratio is 9.17x.

LILA's current market cap is 1.6 bn. Debt: 2.3 bn. EBITDA is not able to be found. Adjusted OIBDA number is $127 per quarter, so about 500 mn per year. My understanding is that adjusted OIBDA is somewhat equivalent to adjusted EBITDA. Please let me know if I am wrong.
So the EV/EBITDA ratio is approximately 8x.

I would argue that this may be a somewhat fair value deal with CWC. We won't know until we see the offer terms.

Let's say we use your 500 mn EBITDA figure. You left out 238.2 mn cash and 63 mn fair value of derivatives in the LiLAC Group, so EV/EBITDA is about 7.3.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: giofranchi on November 08, 2015, 11:40:40 PM
That's one of the niceties of investing with Malone: You really can trust him doing stuff like this in an efficient way. There are great opportunities to create or destroy value for shareholders through acquisitions. He really has proven to be a guy who creates value through financial transactions.

+1

Cheers,

Gio
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rpadebet on November 09, 2015, 07:17:03 AM
Does IRS wash sale rule apply if I swap LILA for LILAK?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 09, 2015, 08:39:39 AM
CWC's 2015 first 6 months EBITDA: 427 M dollars. Let's assume 850 Mn per year EBITDA.
Current long term debt: 2.8 bn.
If acquired at 5 bn market cap, the EV/EBITDA ratio is 9.17x.

LILA's current market cap is 1.6 bn. Debt: 2.3 bn. EBITDA is not able to be found. Adjusted OIBDA number is $127 per quarter, so about 500 mn per year. My understanding is that adjusted OIBDA is somewhat equivalent to adjusted EBITDA. Please let me know if I am wrong.
So the EV/EBITDA ratio is approximately 8x.

I would argue that this may be a somewhat fair value deal with CWC. We won't know until we see the offer terms.

Let's say we use your 500 mn EBITDA figure. You left out 238.2 mn cash and 63 mn fair value of derivatives in the LiLAC Group, so EV/EBITDA is about 7.3.

You are right......
I looked at CWC's cash position. It is only 151 mn, so that only adjusts the EV/EBITDA to 9x. Using LILA at 7.3x to acquire CWC at 9x is definitely a dilution for currently LILA shareholders. In addition, I noticed that CWC's cable and broadband revenue isn't that strong, basically just in the Caribbean. In all other areas, this revenue figure is either pretty small or none. Therefore, it is kind of like acquiring a teleco at 9x instead of a cable business at 9x. I wonder what's your thought on this? Maybe we will have huge cable growth from here and it would be ok? I am a bit concerned here.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 09, 2015, 10:03:20 AM
According to CWC's web site, they have 3.7M mobile customers and 388K broadband customers. So it looks more like a merger of LILA's cable business with CWC's wireless business. They also have sub-sea and over the land fiber to support future internal growth as well as B2B, wholesale business.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: mevsemt on November 09, 2015, 11:38:22 AM
When thinking about how a potential deal could be structured, don't forget CWC's tax assets ($5+ billion of UK capital losses and $3+ billion of US trading losses).  Now, these assets are currently "stranded" at CWC since they have no UK/US operations.  LiLAC wouldn't be able to use these assets either... at least not directly. 

But remember, LiLAC is a tracker, so I suppose it's possible for LBTY to send cash over to LiLAC to help fund the deal, and then immediately after the deal is closed LiLAC could send the UK tax asset over to LBTY.  Essentially, this would "un-strand" the CWC UK tax asset since LBTY would be able to use it...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 09, 2015, 12:12:39 PM
When thinking about how a potential deal could be structured, don't forget CWC's tax assets ($5+ billion of UK capital losses and $3+ billion of US trading losses).  Now, these assets are currently "stranded" at CWC since they have no UK/US operations.  LiLAC wouldn't be able to use these assets either... at least not directly. 

But remember, LiLAC is a tracker, so I suppose it's possible for LBTY to send cash over to LiLAC to help fund the deal, and then immediately after the deal is closed LiLAC could send the UK tax asset over to LBTY.  Essentially, this would "un-strand" the CWC UK tax asset since LBTY would be able to use it...

Thanks, mevsemt, this is a great point. Shifting tax-losses is one of the main advantages Malone once mentioned when comparing tracking stocks to spin-offs, so it's highly probable that this will work which makes the whole deal even more attractive.

I'm very curious how they are going to structure this deal in the end. I just can't see Malone realizing a huge taxable gain on his personal CWC stake and him accepting this "leakage". This is mostly independent from his role and interests in LBTYA/LILA. He wouldn't agree to that in an acquisition by a theoretical third party either and I don't think this transaction could go through without the consent of such a large CWC shareholder.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: mevsemt on November 09, 2015, 12:34:25 PM
Well, hopefully they'll figure out a way to make the deal work... Another idea is they could offer both LiLAC AND LBTY shares in proportion to the relative values of CWC's operating assets and tax assets.   It's possible CWC shareholders will be given an all stock option (which will make it tax efficient for Malone) as well as a cash/stock option. 

BTW I wonder if LiLAC could use CWC's US tax asset to shield gains from selling their Puerto Rico business... Remember, the PR asset currently has potential synergies that can only be realized by a US company (i.e. CHTR). 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: wisborough on November 09, 2015, 01:53:28 PM
CWC. March Year end. It will have about $2.6bn USD of debt. It has market cap currently of $4.8bn. and minorities worth about $1.5bn.  So its EV excl. tax losses is $8.9bn.   Its ebitda for fymarch 2016 is expected to be about $925mn.  EV/EBITDA is 9.6x  March 16.  This will not include the full rate of its cost synergies ($125mln target) from its merger with Columbus earlier in the year - add approx $100mln on to this - so its on about 8.7x March 2016 pro forma for the synergies.

It has a very inefficiently structured balance sheet. it has not tax relief on its debt.  So on interest bill of c.$210mln per annum currently.  As Liberty has taxable income in UK  it can save almost $50mln a year on the interest bill alone via tax relief.

so Malones entry into CWC was via selling his stake in Columbus to CWC. CWC was a struggling incumbent telco business  with hugely underinvested assets- i wonder why he did it this way when he could have purchased Columbus for Liberty Global a year ago and then picked up the the CWC scraps on the cheap.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: loganc on November 09, 2015, 11:36:20 PM
When thinking about how a potential deal could be structured, don't forget CWC's tax assets ($5+ billion of UK capital losses and $3+ billion of US trading losses).  Now, these assets are currently "stranded" at CWC since they have no UK/US operations.  LiLAC wouldn't be able to use these assets either... at least not directly. 

But remember, LiLAC is a tracker, so I suppose it's possible for LBTY to send cash over to LiLAC to help fund the deal, and then immediately after the deal is closed LiLAC could send the UK tax asset over to LBTY.  Essentially, this would "un-strand" the CWC UK tax asset since LBTY would be able to use it...

I haven't done much diligence on CWC and apologize for my ignorance, but could you point to where the tax assets are disclosed in the public financial statements?  TYIA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 10, 2015, 01:56:39 AM
When thinking about how a potential deal could be structured, don't forget CWC's tax assets ($5+ billion of UK capital losses and $3+ billion of US trading losses).  Now, these assets are currently "stranded" at CWC since they have no UK/US operations.  LiLAC wouldn't be able to use these assets either... at least not directly. 

But remember, LiLAC is a tracker, so I suppose it's possible for LBTY to send cash over to LiLAC to help fund the deal, and then immediately after the deal is closed LiLAC could send the UK tax asset over to LBTY.  Essentially, this would "un-strand" the CWC UK tax asset since LBTY would be able to use it...

I haven't done much diligence on CWC and apologize for my ignorance, but could you point to where the tax assets are disclosed in the public financial statements?  TYIA.

See note 2.7 (pages 111-112) in their annual report (http://www.cwc.com/live/annual-report/downloads/Cable%20%26%20Wireless%20Annual%20Report.pdf):

Quote
The US$7,339 million (31 March 2014 – US$6,643 million) tax losses include UK capital losses of US$5,507 million (31 March 2014 – US$5,421 million). Tax losses have not been recognised as there are insufficient taxable profits to utilise those losses in future periods.

Compare the sheer size of these losses with CWC's EV of ~$8bn. I think taxes could even be the main driver behind the transaction. Though usually capital losses can only be used to offset capital gains, CWC's losses can be of tremendous value for Liberty.

By the way, Malone is holding his shares through a LLC holding. I don't know enough about US corporate tax law but there might be a way to structure so that his holding can accept a (part) cash offer without paying tax on the gains.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 13, 2015, 09:13:19 AM
When thinking about how a potential deal could be structured, don't forget CWC's tax assets ($5+ billion of UK capital losses and $3+ billion of US trading losses).  Now, these assets are currently "stranded" at CWC since they have no UK/US operations.  LiLAC wouldn't be able to use these assets either... at least not directly. 

But remember, LiLAC is a tracker, so I suppose it's possible for LBTY to send cash over to LiLAC to help fund the deal, and then immediately after the deal is closed LiLAC could send the UK tax asset over to LBTY.  Essentially, this would "un-strand" the CWC UK tax asset since LBTY would be able to use it...

I haven't done much diligence on CWC and apologize for my ignorance, but could you point to where the tax assets are disclosed in the public financial statements?  TYIA.

See note 2.7 (pages 111-112) in their annual report (http://www.cwc.com/live/annual-report/downloads/Cable%20%26%20Wireless%20Annual%20Report.pdf):

Quote
The US$7,339 million (31 March 2014 – US$6,643 million) tax losses include UK capital losses of US$5,507 million (31 March 2014 – US$5,421 million). Tax losses have not been recognised as there are insufficient taxable profits to utilise those losses in future periods.

Compare the sheer size of these losses with CWC's EV of ~$8bn. I think taxes could even be the main driver behind the transaction. Though usually capital losses can only be used to offset capital gains, CWC's losses can be of tremendous value for Liberty.

By the way, Malone is holding his shares through a LLC holding. I don't know enough about US corporate tax law but there might be a way to structure so that his holding can accept a (part) cash offer without paying tax on the gains.

I think what will happen is that stock is issued to exchange with CWC and then a buyback is announced. This is indirect cash offer but saves the tax payment.

We will see how this goes. If it is LILA shares or Liberty Global shares.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 16, 2015, 10:44:10 AM
Liberty Global Announces Recommended Share Acquisition of Cable & Wireless Communications

http://www.businesswire.com/news/home/20151116006312/en/Liberty-Global-Announces-Recommended-Share-Acquisition-Cable
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on November 16, 2015, 11:46:25 AM
So it looks like most of CWC will end up in LBTYA/LBTYK and about 20% or in LILA/LILAK.  Interesting comment in the release that the Liberty intergroup holding of CWC could end up getting spun out to LILA/LILAK shareholders eventually.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Own The Rails on November 16, 2015, 11:56:48 AM
Buffett and Lou Simpson both added modest positions in LILAC last quarter: http://www.dataroma.com/m/activity.php?sym=LILAK&typ=a (http://www.dataroma.com/m/activity.php?sym=LILAK&typ=a)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: marazul on November 16, 2015, 12:26:33 PM
They did not purchase any LILA. They owned LBTY so they received those shares.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on November 16, 2015, 01:45:02 PM
So it looks like most of CWC will end up in LBTYA/LBTYK and about 20% or in LILA/LILAK.  Interesting comment in the release that the Liberty intergroup holding of CWC could end up getting spun out to LILA/LILAK shareholders eventually.

LBTYA/K would receive spin-off of intergroup interest. Current LILA/K would not receive the intergroup interest.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 16, 2015, 01:52:14 PM
This offer is carefully crafted to disguise which shareholder group ends up with which ratio of LBTYA/K vs LILA/K shares. After the first careful read of the whole thing I still don't know which one to choose to receive the maximum LILA/K amount. I'm tempted to just go with Malone.

What exactly is the difference between Dual Share offerings I (Malone) and II, and the LiLAC Alternative of the "Recommended" Offer?

My first impression is that the "blended" rates of the offers are more or less just a nominal amount and not the real value of the offer. Why would Malone and the others accept lower prices?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 16, 2015, 02:18:17 PM
This offer is carefully crafted to disguise which shareholder group ends up with which ratio of LBTYA/K vs LILA/K shares. After the first careful read of the whole thing I still don't know which one to choose to receive the maximum LILA/K amount. I'm tempted to just go with Malone.

What exactly is the difference between Dual Share offerings I (Malone) and II, and the LiLAC Alternative of the "Recommended" Offer?

My first impression is that the "blended" rates of the offers are more or less just a nominal amount and not the real value of the offer. Why would Malone and the others accept lower prices?

I read through this and also cannot understand the differences between I and II.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 16, 2015, 02:56:23 PM
From the press release:

Quote
The Offer includes three alternative proposals which CWC shareholders can elect to receive, as described in detail in the Rule 2.7 announcement: a recommended proposal and two alternative proposals. CWC shareholders are encouraged to review that document for details.

Where can one find this Rule 2.7 announcement?

Title: Re: LILA - Liberty Global Latin America tracker
Post by: jay21 on November 16, 2015, 02:58:20 PM
Here: http://www.libertyglobal.com/pdf/press-release/11-16-Liberty-Global-Announces-CWC-FINAL-COMPLETE.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 16, 2015, 03:26:14 PM
Thanks jay21!
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 17, 2015, 06:47:00 AM
So it looks like most of CWC will end up in LBTYA/LBTYK and about 20% or in LILA/LILAK.  Interesting comment in the release that the Liberty intergroup holding of CWC could end up getting spun out to LILA/LILAK shareholders eventually.

This is very cleverly structured if you look at it from the goal of maximizing your LiLAC holdings. As a normal minority shareholder you have an incentive to elect the Recommended Offer and then go for the LiLAC Alternative. If all the minority shareholders do this, however, they'll end up with a smaller percentage of LiLAC than the major shareholders (hint: take a look at the maximum amounts of LiLAC shares for each offer). If the minority shareholders saw this and, therefore, collectively elected either Dual Share Offer I or II they'd be even worse than by staying with the Recommended Offer + LiLAC Alternative. In other words, the fewer shareholders choose the Recommended Offer + LiLAC Alternative the more attractive it becomes, and vice versa. This is game theory at its finest.

It's almost certain that Malone and the other majority shareholders will end up with a larger than proportional LiLAC stake.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 17, 2015, 02:28:49 PM
From the press release:
Quote
If the transaction closes, utilization of CWC’s US and U.K. deferred tax assets would be restricted and we believe
that material realization of the benefits of those assets would be unlikely.

Any comments on this? They seem to imply that deferred tax assets will not be useful.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 18, 2015, 11:29:36 AM
Interview with the CWC CEO: http://www.bloomberg.com/news/videos/2015-11-17/c-w-ceo-liberty-global-deal-brings-content-scale
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 12:40:23 PM
It is clearly a great deal for CWC shareholders and Malone, but given the lack of tax benefits, it begs the question: Is it a good deal for Liberty Global (Liberty Global Group & LiLAC Group) shareholders?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 18, 2015, 01:11:44 PM
It is clearly a great deal for CWC shareholders and Malone, but given the lack of tax benefits, it begs the question: Is it a good deal for Liberty Global (Liberty Global Group & LiLAC Group) shareholders?

I don't doubt that. Europe has shown that quad play improves churn and therefore margins. Malone said at the LMCA shareholder meeting that he sees this as the future in all markets. It was really a very good opportunity for them to build out quad play in Latin America. Add to this the scale advandtages.

Besides, I get the impression that they undersell the tax benefits. Their statement that they won't be able to use them doesn't sound that absolute to me. Look at the clever wording. What they haven't said is that they'll loose the benefits. And I don't think that they really paid for them…

https://m.youtube.com/watch?v=LAf0QnLFS7Q
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 01:53:16 PM
Quote
I don't doubt that.

I understand the quad play synergies, but there is a big discrepancy between LiLAC's valuation before the deal (EV = 7.0 times EBITDA) and what they are paying for CWC  (optimistically EV = 9.2 times EBITDA assuming unrealized synergies). And LiLAC group's existing shareholders are giving up close to 75% of existing businesses valued at 7 times EBITDA to get 25% of CWC valued at 9.2 times EBITDA unless I am missing something.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 02:02:40 PM
Existing LiLAC group shareholders owned $530M of EBITDA before the merger with CWC. After the merger, the New LiLAC group EBITDA is $1.4B, out of which 25.44% is owned by existing LiLAC shareholders, which puts their pro-rata share of EBITDA at $350 $356M. So the growth rate of EBITDA has to be very high post-merger relative to growth rate w/o CWC to justify this.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 18, 2015, 02:03:20 PM
Quote
I don't doubt that.

I understand the quad play synergies, but there is a big discrepancy between LiLAC's valuation before the deal (EV = 7.0 times EBITDA) and what they are paying for CWC  (optimistically EV = 9.2 times EBITDA assuming unrealized synergies). And LiLAC group's existing shareholders are giving up close to 75% of existing businesses valued at 7 times EBITDA to get 25% of CWC valued at 9.2 times EBITDA unless I am missing something.

The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x. However, I agree with you that a cash deal would have been better for LILA shareholders. But Malone wouldn't have sold for the same amount in cash because he's looking at after tax returns.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 02:08:30 PM
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on November 18, 2015, 02:57:09 PM
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.

I think I generally agree with you. From the beginning, diluting existing LiLAC shareholders was kind of the point of Malone's sale to LiLAC. That's also why they made the offer so complicated. Malone wants to have a bigger part of LiLAC. I saw this coming and swapped my LILA for CWC (and I also posted it here). Now, he tries to make me take this "Recommended Offer" but I won't do it.

However, I tend to disagree with the notion that, in an alternative universe, this offer would have been a cash offer with the same price tag. It just wouldn't have happened because Malone always looks at his after-tax returns.

In the long run, this deal should be accretive anyway. And, as mentioned, I don't think they are completely candid with regard to how useful the tax losses are. If you don't agree, you are free to vote against it at the shareholder meeting. Malone's votes will be suspended.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 03:28:30 PM
Actually, the deal is better than I originally thought for current LiLAC shareholders. It is true that existing LiLAC shareholders' share of combined EBITDA post merger is lower, but so is their share of debt. After the deal, their share of debt comes to $1.3B, lower than the current $2.1B debt. As a result, today's LiLAC share price implies a post merger EV/EBITDA of 8.3 for the New LiLAC Group. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: moatsandvalue on November 18, 2015, 04:29:34 PM
LiLAC shareholders had a business valued at no more tan ev/ebitda 8 (Chile & PR). With cwc operation, they change and will own a business valued at 9,5x ebitda.

Calculation:
TTM proportionate ebitda cwc: $668
synergies cwc-colombus: $100
Net debt cwc: $3125
TTM ebitda LiLAC ex minority interest PR: $490 - (186.5 * 40%) = 415.4
Net debt LiLAC: $2150
Ownership LiLAC actual shareholders: 25.44%

mkt value 25.44% = $1600
ev/ebitda x9.5
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 18, 2015, 04:56:20 PM
According to the press release announcing the deal, the New LiLAC group will have an EBITDA of $1.4B which is about $140M higher than your numbers. Also you deducted the minority interest in PR but you did not consider the debt attributed to minority interest.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Fat Pitch on November 18, 2015, 08:49:23 PM
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.

I think I generally agree with you. From the beginning, diluting existing LiLAC shareholders was kind of the point of Malone's sale to LiLAC. That's also why they made the offer so complicated. Malone wants to have a bigger part of LiLAC. I saw this coming and swapped my LILA for CWC (and I also posted it here). Now, he tries to make me take this "Recommended Offer" but I won't do it.

However, I tend to disagree with the notion that, in an alternative universe, this offer would have been a cash offer with the same price tag. It just wouldn't have happened because Malone always looks at his after-tax returns.

In the long run, this deal should be accretive anyway. And, as mentioned, I don't think they are completely candid with regard to how useful the tax losses are. If you don't agree, you are free to vote against it at the shareholder meeting. Malone's votes will be suspended.

Ya I also avoided some of the dilution by moving to CWC. Now that Malone is going to have a sizable stake I don't think he'll dilute himself going forward. LILAC shareholders traded 2 stranded cable assets for a larger asset that will create scale and get this cash flow machine going. Other cable assets such as Digicel are now screwed since their cost of debt is 11%+ and no access to equity markets. With 1.4b in EBITDA and prob ~700mm+ FCF/yr we should start seeing some consolidation occurring.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: giofranchi on November 19, 2015, 12:15:48 AM
Now that Malone is going to have a sizable stake I don't think he'll dilute himself going forward.

+1

With 1.4b in EBITDA and prob ~700mm+ FCF/yr we should start seeing some consolidation occurring.

+1

Cheers,

Gio
Title: Re: LILA - Liberty Global Latin America tracker
Post by: moatsandvalue on November 19, 2015, 12:18:08 AM
According to the press release announcing the deal, the New LiLAC group will have an EBITDA of $1.4B which is about $140M higher than your numbers. Also you deducted the minority interest in PR but you did not consider the debt attributed to minority interest.

Take cwc proportionate ebitda. There are some minority interests as well there. You are right in the debt (-376,8), but even after taking into account this, it's a multiple higher than 9x ebitda.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: folivera13 on November 19, 2015, 03:59:42 AM
LTM multiple is high but key is forward multiple including any synergies Liberty can extract. Once growth and extra synergies are taken into account valuation looks cheap. Add on accretive M&A and it can be a home run. Key is meeting growth expectations. If they grow EBITDA at 5% versus 10-11%, the tracker will take a big hit.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on November 19, 2015, 02:35:01 PM
moatsandvalue,

You are right about the proportionate CWC numbers. I think we will get the pro-forma financials in the near future and allocation of debt and EBITDA among the three entities will be clearer then. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on November 30, 2015, 12:50:15 PM
LILAK vs LILA reverse spread is 5%. This is rather nuts. Unfortunately I swapped to LILA some time ago.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 30, 2015, 09:22:30 PM
LILAK vs LILA reverse spread is 5%. This is rather nuts. Unfortunately I swapped to LILA some time ago.

I wonder why is this happening at all.  :o The liquidity discount shouldn't be so high.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on November 30, 2015, 09:43:58 PM
In all other Liberties, C/K trade at 0-5% discount.

IMO it's a great time to swap LILAK to LILA. But then I said that couple months ago when they were at same price. ;)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on February 19, 2016, 02:57:27 PM
http://www.sec.gov/Archives/edgar/data/1570585/000157058516000397/exhibit991lgearningsreleas.htm

The LILA results were not as good as I expected.
If 2016 guidance for EU and Latin's growth are similar, why should I keep the LILA shares in this geographically unstable area instead of LBTYK shares for a more stable EU economy?  ::)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 19, 2016, 03:07:40 PM
http://www.sec.gov/Archives/edgar/data/1570585/000157058516000397/exhibit991lgearningsreleas.htm

The LILA results were not as good as I expected.
If 2016 guidance for EU and Latin's growth are similar, why should I keep the LILA shares in this geographically unstable area instead of LBTYK shares for a more stable EU economy?  ::)

They clearly guided to double-digit EBITDA growth when CWC closes, and there are many more targets after that.

But you can sell them if you want. Malone might be on the other side of that transaction, you never know... He seems to want those shares, he opted to convert his CWC stake to LiLAC rather than LGI.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on February 19, 2016, 08:01:30 PM
http://www.sec.gov/Archives/edgar/data/1570585/000157058516000397/exhibit991lgearningsreleas.htm

The LILA results were not as good as I expected.
If 2016 guidance for EU and Latin's growth are similar, why should I keep the LILA shares in this geographically unstable area instead of LBTYK shares for a more stable EU economy?  ::)

They clearly guided to double-digit EBITDA growth when CWC closes, and there are many more targets after that.

But you can sell them if you want. Malone might be on the other side of that transaction, you never know... He seems to want those shares, he opted to convert his CWC stake to LiLAC rather than LGI.

Hmm... I think I might get confused with EBITDA growth vs OCF growth. OCF involves working capital but EBITDA does not. I did remember reading before that they think EBITDA growth can be in the 13%-15% range.

If the depreciation method is similar, and they guided the same OCF growth for Liberty Global, does that imply that Liberty Global can also grow at that rate?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 20, 2016, 06:49:23 AM
The lilac guidance doesn't include CWC because it hasn't closed, but on the call they give more details.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: PSV_Cannibal on May 05, 2016, 08:15:50 PM
Has anyone attempted to figure out LILA's valuation proforma the CWC transaction?  It'd be nice to know what this thing trades at on a P/CF basis.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on May 16, 2016, 09:22:05 AM
Apparently Fries was on TV today and all but confirmed that LBTYA would distributed the LiLAC shares.

Also, http://www.bloomberg.com/gadfly/articles/2016-05-16/john-malone-should-revamp-liberty-lilac-tracking-stocks
Title: Re: LILA - Liberty Global Latin America tracker
Post by: merkhet on May 16, 2016, 10:08:03 AM
Apparently Fries was on TV today and all but confirmed that LBTYA would distributed the LiLAC shares.

Also, http://www.bloomberg.com/gadfly/articles/2016-05-16/john-malone-should-revamp-liberty-lilac-tracking-stocks

I thought that was always the plan? The issue was whether to do it all at once or over time?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on July 14, 2016, 05:36:28 AM
CWC results:

http://phx.corporate-ir.net/phoenix.zhtml?c=191835&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTExMDM3ODI2JkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3
Title: Re: LILA - Liberty Global Latin America tracker
Post by: xtreeq on July 14, 2016, 06:29:28 AM
Thanks Liberty
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on August 08, 2016, 10:08:38 AM
anyone have any insight as to why LILA/K is off 11-12% today? is it a delayed reaction to earnings?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: namo on August 09, 2016, 12:15:54 AM
That's my best guess as well. I bought more yesterday.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on August 09, 2016, 05:30:01 AM
hi, it's actually because a wunderlich securities analyst lowered its price target from $59 to $43 while maintaining a buy.  I didn't see the note, but I'm sure it was the classic sell side "chasing the stock" phenomenon. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: PSV_Cannibal on August 19, 2016, 09:28:11 AM
I'm unsure as to why this stock keeps selling off (down 35% since beginning of June), but I suspect it's related to motivated selling; 119 shares were distributed to Liberty Global shareholders in early July. Trading volume has since been significantly higher. Can anyone attribute the drop in share price to specific events in the company?  I bought more yesterday and today.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on September 02, 2016, 04:25:36 PM
Almost 300-slide presentation on LiLAC:

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

Follow him on Twitter: @find_me_value
Title: Re: LILA - Liberty Global Latin America tracker
Post by: frommi on September 02, 2016, 10:05:23 PM
Almost 300-slide presentation on LiLAC:

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

Follow him on Twitter: @find_me_value

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?
While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.
Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ratiman on September 03, 2016, 02:42:10 AM
So I didn't know anything about LILA before opening this slide deck, but I did own some UCOMA back in the day and remember that cable seemed like a poor fit for a region that's mostly islands and mountains. Wouldn't it just be easier to shoot up some satellites than try to wire a whole region that's so spread out? This is not one big contiguous market like the US. The whole argument for cable consolidation in the US is that there are economies of scale, but doesn't that argument cut the other way in Latin America? So I do a quick search for satellite . . . OK, satellite is crushing VTR in Chile. Alright, well maybe it's doing better on the islands . . . Dish and Movil moving into Puerto Rico, market shrinking. That seems ominous.  Closes slide deck . . .
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on September 03, 2016, 04:55:49 AM
So I didn't know anything about LILA before opening this slide deck, but I did own some UCOMA back in the day and remember that cable seemed like a poor fit for a region that's mostly islands and mountains. Wouldn't it just be easier to shoot up some satellites than try to wire a whole region that's so spread out? This is not one big contiguous market like the US. The whole argument for cable consolidation in the US is that there are economies of scale, but doesn't that argument cut the other way in Latin America? So I do a quick search for satellite . . . OK, satellite is crushing VTR in Chile. Alright, well maybe it's doing better on the islands . . . Dish and Movil moving into Puerto Rico, market shrinking. That seems ominous.  Closes slide deck . . .

Yeah, right, that Malone guy has no idea what he's talking about! Why own cable networks when you can own satellites?! Oh, wait, actually, he once controlled DirecTV, and then… —he sold it. I wonder why.

I think you still don't know anything about LILA.

Almost 300-slide presentation on LiLAC:

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

Follow him on Twitter: @find_me_value

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?
While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.
Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).

He just bought a lot of it in a roundabout way — by agreeing to the CWC deal.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ratiman on September 03, 2016, 05:11:59 AM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on September 03, 2016, 08:34:13 AM
Almost 300-slide presentation on LiLAC:

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

Follow him on Twitter: @find_me_value

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?
While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.
Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).

9x EBITDA is not cheap for LILA. For one thing, their cost of debt is much higher than for similar assets in the USA or Europe, because the interest rates in local currencies are much higher. Sure, LILA's debt is mostly USD, but that means that they need to by swaps to protect against currency drops. Some of LILA's markets are very competitive as well (Chile, Puerto Rico). I don't see the bargain here, but if it does trade down for <7x EV/EBITDA, I would take a sharp look.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on September 03, 2016, 10:56:59 AM
I find the 300 slide presentation strange. Very long, unorganized, repetitive and almost no discussion on why the current valuation is cheap.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: giofranchi on September 03, 2016, 11:40:23 AM
I think LILA/LILAK has lots of opportunities for profitable growth. But it also poses some risks that other cos in the "Malone family" don't run. I cannot be sure why it has sold off, and if the only reason might be a technical one.
Therefore, I have sold and used the proceeds to buy more LMCA. If the original thesis about LILA is still fine, there will be many chances to buy it in the future.

Cheers,

Gio
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on September 03, 2016, 12:32:52 PM
Quote
But it also poses some risks that other cos in the "Malone family" don't run.

Can you expand on these LILA specific risks that other Malone entities don't have?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: giofranchi on September 03, 2016, 02:37:31 PM
Quote
But it also poses some risks that other cos in the "Malone family" don't run.

Can you expand on these LILA specific risks that other Malone entities don't have?

Basically those risks of investing in a region with little political stability.

Cheers,

Gio
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on September 03, 2016, 07:11:53 PM
I find the 300 slide presentation strange. Very long, unorganized, repetitive and almost no discussion on why the current valuation is cheap.

This isn't a VIC long thesis. The author just wanted to do a deep dive on it to better understand the pieces and market dynamics, not necessarily trying to convince anyone to buy afaik.

But if you don't like it, I'm sure you can ask the author for a full refund.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: maybe4less on September 03, 2016, 07:13:09 PM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on September 03, 2016, 07:24:52 PM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

Even for video, satellite's advantage was bigger before cable started going all digital.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on September 03, 2016, 07:53:35 PM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

Even for video, satellite's advantage was bigger before cable started going all digital.

How does digital video close the satellite's advantage? Can you please elaborate?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on September 04, 2016, 06:01:55 AM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

Even for video, satellite's advantage was bigger before cable started going all digital.

How does digital video close the satellite's advantage? Can you please elaborate?

For a while, satellite was all digital and carried tons of channels while cable was a mix of analog and digital channels, with the analog channels eating up a ton of bandwidth and restricting the total number of channels that could be carried. So it was a lower-quality offering that that couldn't carry as many channels.

Now that cable is going all digital, it can carry more channels that are all HD, and the removal of analog channels frees up a lot of space to take up broadband speeds up, which makes the overall offering more compelling.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on September 04, 2016, 08:57:13 AM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

Even for video, satellite's advantage was bigger before cable started going all digital.

How does digital video close the satellite's advantage? Can you please elaborate?

For a while, satellite was all digital and carried tons of channels while cable was a mix of analog and digital channels, with the analog channels eating up a ton of bandwidth and restricting the total number of channels that could be carried. So it was a lower-quality offering that that couldn't carry as many channels.

Now that cable is going all digital, it can carry more channels that are all HD, and the removal of analog channels frees up a lot of space to take up broadband speeds up, which makes the overall offering more compelling.


Thank you!
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ni-co on September 04, 2016, 11:11:53 PM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband – and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: ratiman on September 05, 2016, 05:25:16 AM
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband – and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.

OK thanks for clarifying. Nobody thinks data over satellites is an option. The competitive options, I'm guessing, are broadband vs. satellite+mobile. In PR it's Liberty PR vs. Movil/Dish, so broadband is really competing with a better mobile plan, right? In the US a consumer might choose all three but is that the case in LA?  The very interesting slide deck makes some points about low uptake of broadband among lower income groups in US and LA, and most consumers in LA are low income by our standards. Sure, cable broadband is the superior product, but is there demand for it versus mobile from your typical low income consumer? I don't know but I suspect the real investment case for LILA is not "the Puerto Rican cable market is very exciting" but instead confidence in Malone to work his magic. And yes, that is an ad hominem.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 04, 2016, 07:29:11 AM
Q3 out. Stock dropped sharply.
https://www.sec.gov/Archives/edgar/data/1570585/000157058516000862/exhibit991lgearningsreleas.htm

CWC's OCF number is disappointing. The promotional Mike Fries kept dodging the numbers.

""LiLAC, our Latin American and Caribbean tracking stock, reported 5% rebased OCF growth in Q3. CWC's7 Q3 financial results were below our expectations, but we have already started laying the groundwork for improved future performance. We now expect LiLAC Group, excluding Cable & Wireless, to achieve 6% rebased OCF growth for full year 2016. With respect to CWC, we expect that the business will deliver OCF between $215 and $225 million8 in Q4 2016"

Where is the Q3 number?????

I finally found it buried down pages below.

"Finally, our recently acquired CWC business, reported a 4% rebased revenue contraction during Q3 2016"  :(



Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on November 04, 2016, 10:13:57 AM
a bit of an extreme reaction no?   although down 4% on an apples to apples for rev is pretty shocking.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: brendanb22 on November 04, 2016, 10:31:04 AM
Seems like a bit of an overreaction. Do you think they will rebound from this or is it more of a structural problem?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: namo on November 04, 2016, 12:29:22 PM
Yet according to them the corresponding OCF is up 3% as they cut costs. Yes, I was surprised by the reaction.

On the other hand, if you look at the raw numbers, the number of shares has been multiplied by 4 and the Y/Y OCF growth is +177%, so there's a big gap. It's probably a bad quarter, and the figures are before synergies, but that may explain some of the reaction?

I need to dig deeper into the numbers.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: muscleman on November 04, 2016, 12:46:39 PM
Yet according to them the corresponding OCF is up 3% as they cut costs. Yes, I was surprised by the reaction.

On the other hand, if you look at the raw numbers, the number of shares has been multiplied by 4 and the Y/Y OCF growth is +177%, so there's a big gap. It's probably a bad quarter, and the figures are before synergies, but that may explain some of the reaction?

I need to dig deeper into the numbers.

The OCF growth comes entirely from synergies, which you can't rely on forever. The cost cutting can only go that far. You can't cut your cost below zero.
In addition, the original investment thesis already included the synergies, so we need to look at the OCF growth without synergies.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on November 04, 2016, 12:57:29 PM
@namo, I'm not sure what you mean by OCF is up 3% as they cut costs and OCF growth is 177% Y/Y?

The sharecount went up because of the C&W acquisition since Liberty Global issued stock.  Of course OCF for Lilak is up 177% because of C&W.

On C&W alone, the revenue is down 4%.  It seems like they bought less than what they bargained for.   I say that because in July, C&W posted FY results for C&W saying that proportionate EBITDA was up 14% Y/Y.  And now all of a sudden, now that the deal is closed, on a re-based basis, they're going to be flat Y/Y for C&W.  So the old C&W team may have been far more optimistic before selling C&W to Liberty Global.

That being said, hopefully its a fixable problem.  Mike said something about management being distracted with the acquisition, delayed product launches and a more competitive environment, and that they're optimistic about synergies, which would add back roughly 10% to OCF/EBITDA over the next 4 years.

I wish Fries would stop being so optimistic and promotional and talk a little bit about what the challenges are in this business.  Rutledge is always more grounded.  And these guys need get their reporting cleaned up.  Every quarter its a bunch of noise.  They point to all the metrics in their favor, and throw like 3 dozen positive stats at you, only a few consistent with the stats they gave you last quarter.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: namo on November 04, 2016, 01:34:32 PM
Those are all numbers from the press release. I'm only listening to the call now.

To clarify: I simplified things in the extreme, and said "OCF has done x2.7 when the number of shares has done x4 - no wonder Mr Market looks unhappy".
This is another way to say the same thing as you: it makes us wonder whether the acquisition was overpaid (I thought the price was a bit dear myself. I mostly trust Malone, but he had interests on both sides of the transaction here.)

Another tidbit from the call: they intend to spin LILAC off in H2 2017.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 06, 2016, 06:37:17 PM
Buybacks announced, 300m:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Buyback-Program-LiLAC-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: meiroy on November 06, 2016, 08:11:18 PM
Buybacks announced, 300m:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Buyback-Program-LiLAC-FINAL.pdf

"The program will commence immediately and runs until year-end 2019.
Mike Fries, Chief Executive Officer, said, “The establishment of this buyback program for LiLAC tracking stock
demonstrates confidence in our business and its prospects"

Wanker.


Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on November 06, 2016, 09:59:07 PM
Correct me if I'm wrong but that represents 1% of the market cap spread-out over 3 years. Fries is so promotional... Each of his publications seems like a tricky way to make us see positive signs. If that's his attempt at reassuring shareholders after Friday's drop (which he also tried to conceal in a smoke of mis-leading language in the Q3 report) he must really thinks of his shareholders as dummies  ???
Title: Re: LILA - Liberty Global Latin America tracker
Post by: maybe4less on November 06, 2016, 10:22:19 PM
Correct me if I'm wrong but that represents 1% of the market cap spread-out over 3 years. Fries is so promotional... Each of his publications seems like a tricky way to make us see positive signs. If that's his attempt at reassuring shareholders after Friday's drop (which he also tried to conceal in a smoke of mis-leading language in the Q3 report) he must really thinks of his shareholders as dummies  ???

Don't disagree that Fries has gotten more and more promotional, but I think your calculation is off by about an order of magnitude.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on November 06, 2016, 11:21:46 PM
Oh you're right, I used Liberty Global Europe's market cap instead of Latin America's by mistake.
With a market cap of 3.36B, 300M represent 8.93% of shares being repurchased.
Thanks for pointing it out.

For those of you who are shareholders, are you guys adding, holding, selling?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 07, 2016, 05:56:01 AM
Buybacks announced, 300m:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Buyback-Program-LiLAC-FINAL.pdf

"The program will commence immediately and runs until year-end 2019.
Mike Fries, Chief Executive Officer, said, “The establishment of this buyback program for LiLAC tracking stock
demonstrates confidence in our business and its prospects"

Wanker.

The date doesn't mean that the buybacks will be evenly distributed until then. It's just a way to keep it open-ended. They have limited FCF right now, but it should pick up next year. They could use the whole 300m quickly with a bit of debt and pay it back next year, or if the stock bounces back immediately (not a prediction), they could sit on it and have it available until 2019 as an option.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: scorpioncapital on November 07, 2016, 06:46:07 AM
Promotional could mean proactive, glass half full sort of thing. Not saying Latam cable is the best business in the world but like at IBM and other companies that have some troubles, proactive ceo's are sort of doing capital allocation decisions that an activist might do if they had to come in, seems like pre-empting such complaints.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on December 20, 2016, 08:41:10 AM
Digicel has problems

Read more: http://www.caribbean360.com/business/troubling-signs-ahead-digicel

LONDON, England, Monday December 19, 2016 – A leading voice on global credit markets has raised a red flag about the operations of telecommunications provider Digicel.

Independent research provider CreditSights has released a gloomy report about the company, which operates in 32 Caribbean countries, warning that turbulent times were ahead.

In the presentation released in London, entitled ‘Digicel: Should I stay or go’, CreditSights debt analyst Michael Chakardijan said the company was burdened with high debt estimated at more than US$6 billion and this was unsustainable.

“We view that there is limited to no equity cushion. This gives the company little wriggle room for poor performance and there is not an immaterial threat of distress in the event of poor results in key markets,” he said in a report published in the Irish Examiner.

Digicel, which is owned by Irish businessman Denis O’Brien, has rejected the report, saying: “Digicel’s outlook remains positive with robust plans to deliver by monetizing our network investment and through realistic cost- management initiatives.”


DIGICEL FOUNDER DENIS O’BRIEN
The company has, however, embarked on a major cost-cutting plan and hired financial consultants McKinsey and Goetzpartners to help cut its massive debt burden.

The plan, dubbed Project Swan, includes using more technology and the streamlining of back office functions to maximize efficiencies.

At the same time, Digicel said it would significantly grow its earnings and is pinning its hope on a significant drop in expenditure when its cable and fibre programme begins to bear fruit.

Last month, the company assured bond market investors that these initiatives would increase it profits by 24 percentage points by March 2018, leading to a return to growth.

CreditSights is however not convinced. Chakardijan described the plans as “highly ambitious” and “opaque” and doubted management’s ability to deliver.

“We believe management’s deleveraging plans come with substantial execution risk, which is a very important point,” he said.

The expert explained that Digicel’s debt woes were compounded by declining interest in its services, noting that revenues from phone calls have dropped as users opt for calling services provided by Viber, Whatsapp and Skype.

Chakardijan said the company also had to be concerned about currency fluctuations in some of its overseas markets.

In October last year, O’Brien pulled an initial public offering of Digicel shares, in which the company was seeking to raise as much as US$2 billion to help lower its debt mountain, expand operations and list on the New York Stock Exchange.



Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 16, 2017, 08:12:04 AM
Q4 is out.

Quote
LiLAC Group Highlights
• Gained 94,000 organic RGUs in 2016, powered by strong broadband additions
• Reported 47,400 mobile subscriber additions in 2016, with majority on postpaid
• Stabilized CWC revenue YoY in Q4 2016
• Delivered solid 2016 rebased revenue growth of 6% in Chile
• Operating income for LiLAC Group increased 29% in 2016
• LiLAC Group delivered 6% rebased OCF growth in 2016, including 9% growth excluding CWC
    CWC Q4 U.S. GAAP OCF reported $226 million, ahead of Q4 target
• Closed CWC deal in May of 2016; integration ongoing
    Expecting $150 million of synergies due to LiLAC/CWC integration by 2020

Here's the presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Investor-Call-Q4-2016-Presentation-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on February 16, 2017, 04:16:09 PM
Can anyone comment on Q4 results compared to Q3? Just started following the situation recently and I'm trying to get up to speed - seems like quite the quarter-to-quarter round trip in a business that's usually coveted for the recurring nature of the revenue base.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cookies on March 01, 2017, 04:47:02 PM
Sure -

Chile OCF 94mm vs. 82mm (4q YoY)
PR OCF 59mm vs. 46mm (4q YoY)
CWC was just purchased and is stabilizing - weather, zika, currency issues

adj fcf 116mm for the quarter...465mm annualized.

However, there's a lot of minority interests here and imperfect information with which to examine in detail.  People come up with their own estimates of FCF attributable to the tracking stock based on various data points.  I've done my work but wouldn't publish for others given I used estimates and assumptions a lot.

seems like high single digit FCF yield at these valuations and ~7.5x ebitda.

if you try to normalize for maintenance capex FCF yield higher. 

what i like: tentacles in many markets (i.e. lots of different markets means company has lots of areas from which to pick highest ROI); markets with low broadband/wireless penetration and ARPUs (which means room to go up); data is a high growth area; digicel the main competitor for CWC is overlevered (this can be good or bad as a healthy oligopoly is fine, they may act aggressively as they go after business through pricing); own huge underwater fiber asset (which means their backhaul costs are lower - competitive advantage); malone company which means they are certainly focused on ROI, cashflow, and long-term value... however, it's a cable company in foreign markets and bad/depressed economies (PR and some of Caribbean).

any disagreements, additions welcome!

~5-6% position for me.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on March 13, 2017, 03:19:45 PM
Given all the noise in the last year of financials, how is everyone on this board thinking about modeling/valuation to get enough comfort for the idea to be investable?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on May 07, 2017, 11:18:18 AM
Q1 results:

http://www.libertyglobal.com/pdf/press-release/LG-Q1-2017-Press-Release-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: meiroy on May 07, 2017, 09:25:44 PM
"and are preparing for the hard spin of LiLAC Group towards the end of the year."

To this is the only thing that matters about LiLAC.  For sure it ain't the buybacks. "while also
repurchasing around $20 million of LiLAC Group equity".  Pfft.


Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on May 08, 2017, 11:12:09 AM
What a swing in Mr. Market's sentiment for LILA today :D
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on May 08, 2017, 11:58:17 AM
I am trying to understand this hard spin concept.  So currently it just a tracking stock and I guess it will be it's own independent company with separate SEC filings.  However what is the win there other than more costs?  I am not questioning the wisdom of the move, I just legitimately don't understand the angle.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on May 08, 2017, 12:02:10 PM
Presumably markets value "real companies" higher than tracking stocks.

It is easier to sell the company.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: flesh on May 08, 2017, 12:27:25 PM
They still did a separate lilac conf call today , correct? I've been looking for it on the IR site.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on May 08, 2017, 12:58:52 PM
They still did a separate lilac conf call today , correct? I've been looking for it on the IR site.

Yeah, they did. It was at 10:30 AM.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: forest81 on May 09, 2017, 12:58:54 AM
Listened to the conference call. I must say they sounded very bullish. I really like this. Massive growth potential. I see directors have been buying around this level as well. Just don't know wether I have enough bottle to increase my position. I bought at much higher prices. Saying that it is probably one of my favourite ideas right now.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on May 09, 2017, 01:48:50 AM
Listened to the conference call. I must say they sounded very bullish. I really like this. Massive growth potential. I see directors have been buying around this level as well. Just don't know wether I have enough bottle to increase my position. I bought at much higher prices. Saying that it is probably one of my favourite ideas right now.

Could you help me find the transcript of the conference call please? I found the conf. call of liberty global, but not the lilac conference call.

By the way, I concur with your view on lilac at the moment...

Thanks in advance!
Title: Re: LILA - Liberty Global Latin America tracker
Post by: forest81 on May 09, 2017, 03:14:47 AM
Ive had a look and I can't find a transcript! I listened to the call live. I think maybe if you go to Liberty Global website and listen to the Global call it may be on that as the Lilac conference call was on the same call as the Global one straight after.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: yitech on May 09, 2017, 06:22:57 AM
Transcript: https://seekingalpha.com/article/4070977-liberty-globals-lilak-ceo-mike-fries-q1-2017-results-earnings-call-transcript
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on May 09, 2017, 07:06:27 AM
Transcript: https://seekingalpha.com/article/4070977-liberty-globals-lilak-ceo-mike-fries-q1-2017-results-earnings-call-transcript

Thank you very much. I'll start reading immediately.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: flesh on May 09, 2017, 12:23:44 PM
Ya you just go to the liberty global call and then you can skip to "introduction II" for lilac.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on June 14, 2017, 02:00:29 PM
Anyone attending the AGM?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: longlake95 on June 16, 2017, 09:27:11 AM
Seems like LBTYK, has reached full pariah status, maybe its time to step in...it doesn't get more out of favour than european cable. Hard not to think some kind of deal won't happen...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on July 07, 2017, 04:38:16 PM
Malone buying:

https://www.sec.gov/Archives/edgar/data/1570585/000157058517000240/xslF345X03/wf-form4_149946580352042.xml
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Sunrider on July 09, 2017, 10:29:06 PM
Some fairly meaningful # too ...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: forest81 on July 10, 2017, 07:30:02 AM
Taken a bit of a pop today. Mike Fries was buying around Christmas I remember now Malone interesting times.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on July 10, 2017, 09:57:55 PM
Malone buying:

https://www.sec.gov/Archives/edgar/data/1570585/000157058517000240/xslF345X03/wf-form4_149946580352042.xml

Two takeaways from LILAK's massive move upward (over 11%) today:
 
(1) The market really respects John Malone. This part probably isn't a surprise to anyone reading this.

(2) Given its disparate cable, wireless, and undersea fiber Caribbean and Latin American operations, it's really tough to value the company, so the market reacts more to insider signaling than it otherwise might.   
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on July 12, 2017, 10:20:19 AM
https://www.forbes.com/sites/lukeschiefelbein/2017/07/12/why-billionaire-john-malone-just-bought-16m-of-his-own-business/
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on July 12, 2017, 04:18:09 PM
Malone buying another $21m of lilac:

http://openinsider.com/insider/Malone-John-C/937797
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on August 07, 2017, 03:46:16 PM
Q2:

http://www.libertyglobal.com/pdf/press-release/LG-Q2-2017-Press-Release-FINAL.pdf

Q2 Rebased OCF Growth of 10.5% at LiLAC

LiLAC Group Spin-Off Remains On Track for Year-End 2017
Title: Re: LILA - Liberty Global Latin America tracker
Post by: kmukul on August 08, 2017, 06:14:08 AM
Sorry this may be a dumb question, which is the LBTY, is it different from https://finance.yahoo.com/quote/LILA?p=LILA cant find LBTY.
Thanks a lot
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on August 08, 2017, 06:32:18 AM
Sorry this may be a dumb question, which is the LBTY, is it different from https://finance.yahoo.com/quote/LILA?p=LILA cant find LBTY.
Thanks a lot

LBTYA or LBTYK

Thread at: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lbtya-liberty-global/
Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on September 11, 2017, 07:01:22 PM
Any idea on why Malone/Fries decided to Spin-Off LILA/K completely?

“The spinoff will benefit LiLac shareholders by creating a stand-alone, asset-backed equity, while enhancing its potential attractiveness as an acquisition currency for consolidation opportunities in the highly fragmented Latin American and Caribbean telecommunications markets"

Seems to me that LILAK benefits from the scale of being within the much bigger and stable LBTYA/K when it comes to negotiating programming costs as well as geting more flexibility and credibility to raise debt.
What am I missing here??
Title: Re: LILA - Liberty Global Latin America tracker
Post by: petec on September 12, 2017, 12:44:11 AM
I am assuming they will retain those benefits of scale through an agreement, and that the motivation is based on the undervaluation of LiLAC, which might be addressed by making it a proper company rather than a tracker with no legally defined asset base.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on September 12, 2017, 05:22:00 AM
I am assuming they will retain those benefits of scale through an agreement, and that the motivation is based on the undervaluation of LiLAC, which might be addressed by making it a proper company rather than a tracker with no legally defined asset base.

I think that's pretty much it. They've mentioned a few times that they would keep in place agreements to keep scale/procurement benefits.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on September 12, 2017, 12:27:29 PM
That makes a lot of sense, thanks guys!
Did they say whether Fries would be kept as the CEO? (hoping not)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: undervalued on September 26, 2017, 11:28:57 AM
Did someone take a look of what kind of impact Maria had on the business? If this occurs every 5 years or 10 years, how does that impact returns?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on September 26, 2017, 11:40:22 AM
Did someone take a look of what kind of impact Maria had on the business? If this occurs every 5 years or 10 years, how does that impact returns?

I'm not sure how you quantify it exactly. Obviously since PR is a big chunk of current profitability for LILAK, I'm sure guidance is going to be pulled down. However, since the stock is in the toilet, it looks like the market is already anticipating some bad news.  By my math, around $500 - $600M worth of marketcap.

Mike Fries said , at a recent conference, they are maintaining guidance for now until they can take stock - this was following Irma.  I would be surprised if they didn't lower guidance for the year considering 3M people are without power in PR alone. He also said that since hurricanes are a recurring event in the Caribbean, they have insurance for it.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on September 26, 2017, 12:09:26 PM
I'm not sure how you quantify it exactly. Obviously since PR is a big chunk of current profitability for LILAK, I'm sure guidance is going to be pulled down. However, since the stock is in the toilet, it looks like the market is already anticipating some bad news.  By my math, around $500 - $600M worth of marketcap.

Mike Fries said , at a recent conference, they are maintaining guidance for now until they can take stock - this was following Irma.  I would be surprised if they didn't lower guidance for the year considering 3M people are without power in PR alone. He also said that since hurricanes are a recurring event in the Caribbean, they have insurance for it.

I'd guess they have insurance for their powerplant, but would they have insurance for business interruption/losses?

If PR is without power for 6 months, that would hit revenues there. Unless they charge even when there's no service?

Anyway, you are right that if someone looks short term, then revenue/earnings impact will be likely significant. Whether stock will drop further or not - who knows. Longer term possibly not significant unless PR cannot rebuild.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on September 26, 2017, 12:12:42 PM
I'm not sure how you quantify it exactly. Obviously since PR is a big chunk of current profitability for LILAK, I'm sure guidance is going to be pulled down. However, since the stock is in the toilet, it looks like the market is already anticipating some bad news.  By my math, around $500 - $600M worth of marketcap.

Mike Fries said , at a recent conference, they are maintaining guidance for now until they can take stock - this was following Irma.  I would be surprised if they didn't lower guidance for the year considering 3M people are without power in PR alone. He also said that since hurricanes are a recurring event in the Caribbean, they have insurance for it.

I'd guess they have insurance for their powerplant, but would they have insurance for business interruption/losses?

If PR is without power for 6 months, that would hit revenues there. Unless they charge even when there's no service?

Anyway, you are right that if someone looks short term, then revenue/earnings impact will be likely significant. Whether stock will drop further or not - who knows. Longer term possibly not significant unless PR cannot rebuild.


Yeah it's a good question re: business interruption.  I don't know the answer.

I'm sure they will forfeit subscription revenue for the lack of service being delivered/received. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on October 02, 2017, 06:41:36 AM
Barron's has a piece on LILA:

http://www.barrons.com/articles/blue-skies-ahead-for-malones-lilac-group-1506743163
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on October 06, 2017, 07:11:20 AM
Liberty Global Provides Update on the Impact of Hurricanes in the Caribbean

http://www.businesswire.com/news/home/20171006005214/en/Liberty-Global-Update-Impact-Hurricanes-Caribbean
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on October 18, 2017, 08:16:22 PM
The malone purchases are interesting.  Beyond that, even at reduce price I have the stock at around 7-7.5 EV/EVITDA, not sure if that is really cheap.  Does anyone have any good comps?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on October 30, 2017, 07:00:39 AM
Does anyone know when the LILA spinoff will materialise?

And under what form will they do it, by way of dividend?

thank you.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on October 30, 2017, 09:55:55 AM
Does anyone know when the LILA spinoff will materialise?

And under what form will they do it, by way of dividend?

thank you.

Full spin off was scheduled "before end of the year", but might be pushed back because of the situation caused by the hurricanes. We'll know more during the Q3 call, I'm guessing.

I'm assuming that the tracking stock will stay the same, it'll just now be asset-backed.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: maybe4less on October 30, 2017, 10:16:09 AM
Does anyone know when the LILA spinoff will materialise?

And under what form will they do it, by way of dividend?

thank you.

They announced the Lilak CEO today FWIW. Press release still says that it is expected around the end of the year.

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-LiLAC-Management-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on October 31, 2017, 10:12:48 AM
Does anyone know when the LILA spinoff will materialise?

And under what form will they do it, by way of dividend?

thank you.

Full spin off was scheduled "before end of the year", but might be pushed back because of the situation caused by the hurricanes. We'll know more during the Q3 call, I'm guessing.

I'm assuming that the tracking stock will stay the same, it'll just now be asset-backed.

Thank you.

I was in fact wondering whether that could be a taxable event.

I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

Likewise, dividends are taxable as well, just as liquidations are taxable, so I wonder whether I should sell my LILA's in advance of the spin-off.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on October 31, 2017, 11:53:36 AM
Quote
I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

I don't think the exchange of old CHTR shares for new was a taxable event, so I am not sure what you are trying to say.

In general, the words "Malone or Liberty" and "taxes" are mutually exclusive.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on October 31, 2017, 12:12:17 PM
skanjete, where are you located? The rules for these things might be different where you are. Here, the TWC-CHTR-BHN merger didn't trigger anything taxable (in Canada, and same in the US afaik).
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on October 31, 2017, 12:15:33 PM
Quote
I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

I don't think the exchange of old CHTR shares for new was a taxable event, so I am not sure what you are trying to say.

In general, the words "Malone or Liberty" and "taxes" are mutually exclusive.

skanjete is in some European country (Sweden?). Unless you are familiar with tax laws of that country, you probably should not give tax advice. ;) From what I have seen different countries tax very different events/things/whatever. Assuming that country X tax laws are same/similar to US/Canadian laws is a recipe for pain.

@skanjete: I think your question is tough, since you really need someone who knows your local tax laws and also knows the Liberty spinoff from tracker stock from legal standpoint. I doubt that there's someone who is qualified to give that kind of legal advice here. Though perhaps I am wrong...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Munger_Disciple on October 31, 2017, 12:29:20 PM
Quote
Unless you are familiar with tax laws of that country, you probably should not give tax advice.

What's wrong with you??? You are implying things that are untrue. I am not giving anyone tax advice!
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on October 31, 2017, 02:08:56 PM
I know the charter event wasn't taxable in the US.

But here (indeed an European country) tax laws are arcane. Moreover, certains taxes are collected through the banks and banks are being held liable by the government if some taxes that are due aren't being collected. So in case of the slightest doubt, the banks will tax. Thereafter you have the right to complain and try to recoup some of your money, but good luck with that...

As I said the charter deal has been taxed although shareholders didn't earn a dime in the transaction. Another deal that was taxed was the split of Google in 2014. Shareholders got extra shares by way of dividend which were taxed. Again no economic gain for the shareholder, but a tax for the state. Heck I've even been taxed some buy backs by a company because they considered it to be a dividend!

And although I tried, there's no way you can get an opinion from the banks in advance on how they will treat a transaction. This is not a great country for special situation investing!!!

 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Sunrider on October 31, 2017, 02:46:23 PM
Open an in account - they mostly know what they are doing
Title: Re: LILA - Liberty Global Latin America tracker
Post by: skanjete on November 01, 2017, 02:57:24 AM
Open an in account - they mostly know what they are doing

Do you mean an interactive broker account?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Sunrider on November 01, 2017, 12:35:28 PM
Open an in account - they mostly know what they are doing

Do you mean an interactive broker account?
yes - autocorrect - IB account, if you're in the EU, the account will be held in the UK (likely) under the current passporting rules. You may get a more intelligent treatment than from your local bank.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Happy on November 02, 2017, 06:41:24 AM
In Germany the Charter-TWC takeover didn't trigger taxes. In other situations I received spin-offs and some were treated as a taxable dividend and others weren't. My lawyer also said he can't tell this in advance. The authorities seem to judge this after the fact and sometimes it gets overruled years later (like a Google stock-split that first triggered taxes). So I will probably sell my Global shares before the spin-off, but obviously that's not ideal.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on November 03, 2017, 03:58:18 AM
LILA’s numbers are pretty crappy too, so maybe another reason to sell. Negative FCF this year, infrastructure destroyed in Puerto Rico where the outlook was bad to begin with. Legacy Lila operation in Chile do just fine. That merger with C&W destroyed a lot of value for LILa shareholders. I own a few shares, but I am not tempted to add.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on November 13, 2017, 06:06:55 PM
https://www.sec.gov/Archives/edgar/data/1570585/000157058517000374/xslF345X03/wf-form4_151061276770642.xml
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on December 08, 2017, 11:07:10 AM
Looking at the most recent quarter numbers it looks like revenue was flat even without puerto rico.  Is this not concerning given how much capex there is?  They are in negative fcf due to the capex so it is hard to justify that if you aren't getting any growth. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on December 12, 2017, 11:36:33 AM
And Reid's out:

http://www.cwc.com/news-and-media/press-releases/cable-wireless-announces-john-reid-ceo-to-step-down.html
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on December 14, 2017, 04:16:53 AM
There is a theory that Lilak is trading at a tracking stock discount.    Anyone have any thoughts what the premium will be once this transitions from tracking stock to directly traded stock?    If anyone has any links as to what happens in the 1-3 months afterwards a tracking stock becomes a trading stock, would appreciate it.   I'm wondering if the price goes down first because there are owners who want to sell out.   Thanks!


http://www.libertyglobal.com/pdf/press-release/12-12-LiLAC-Split-Off-Press-Release-FINAL.pdf
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on December 14, 2017, 06:53:17 AM
There is a theory that Lilak is trading at a tracking stock discount.    Anyone have any thoughts what the premium will be once this transitions from tracking stock to directly traded stock?    If anyone has any links as to what happens in the 1-3 months afterwards a tracking stock becomes a trading stock, would appreciate it.   I'm wondering if the price goes down first because there are owners who want to sell out.   Thanks!


http://www.libertyglobal.com/pdf/press-release/12-12-LiLAC-Split-Off-Press-Release-FINAL.pdf

I'm not sure... I kind of feel like the fact that they've announced the change for a long time would've led to the market pricing that in (forward-looking..). It's not like it'll happen as a surprise and suddenly it'll gap up. Though I suppose on the other hand, maybe some investors are prevented by their mandate from owning odd instruments like tracking stocks.

In short: ¯\_(ツ)_/¯
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on December 21, 2017, 04:48:36 PM
https://www.sec.gov/Archives/edgar/data/1570585/000157058517000417/0001570585-17-000417-index.htm
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Gordon Gecko on December 22, 2017, 07:28:45 AM
https://www.sec.gov/Archives/edgar/data/1570585/000157058517000417/0001570585-17-000417-index.htm

Seems positive. Complete waiver of leverage covenants through YE18, w/ smaller than expected equity injection. Only seem to be giving up distributions over the same period, which, face it, weren't really all that likely.

Really seems like one of the more interesting ideas out there now. Management/Board alignment is finally on your side and Digicel is going full restructuring mode. If you just look at the negative FCF and the flat rev/margins, I think you miss the highly competitive pricing environment. And there's now better cure to low prices than low prices. LILAK's already showing pricing power in Jamaica, Panama may be going through some structural changes to consolidate the industry, business friendly political group running Chile, Barbados minority buy-in looks very accretive, and now it looks like LPR won't be a big drag on capital deployment. Knock on wood.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on December 28, 2017, 05:58:00 AM



Sometimes quantitative factors lead to big opportunities.  I think if one uses common sense qualitative factors, I think it leads to big opportunities.

Does LILAK offer the perfect opportunity to go big in a portfolio?

1.   Have earnings that are low short term and have value reflecting the short-term earnings versus the stabilized run rate. 
        For example, have a hurricane depress earnings for short term.
2.   Have in place management that has know how, sources of suppliers, sources of money, and a clear playbook to grow
        that’s been field tested in another region over 20 years.
3.   Have insiders buying the stock.
4.   Have the parent company change it’s mind from not buying more shares to buying more even at the expense of the
        parent company shares being depressed.
5.   Have parent company send top officials to lead the subsidiary.
6.   Have a clear catalyst in changing from tracking stock to direct stock.
7.   Have shares drop more than 50% from highs from 2 years ago?
8.   Have opportunities to grow in services/products offered to existing customer sand have geographies to grow organically
        or via acquisitions for at least 10 years.
9.   Have small market cap that has room to grow.

I think the answer is yes.  Please comment on reasons why anyone thinks otherwise.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on December 28, 2017, 06:25:36 AM
Points 2-9 are valid but I think it comes down to point 1.  Why do you think that the earnings are temporarily depressed?  I see very stale results even without puerto rico.   The thesis is that these markets have low penetration and lila should therefore be able to increase revenue.  How come organic revenue isn't going gangbusters?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on December 28, 2017, 07:11:10 AM
Puerto Rico's numbers are 29% off and are temporary.  When the infrastructure is rebuilt, I'm betting earnings will be at least previous levels.   Also, C&W numbers are accelerating even with the Hurricane impacts.  I think the C&W numbers will see continued growth with the new CEO.  The new CEO will have an easier time leveraging Liberty Global's strengths i.e. tap into institutional knowledge via relationships already built at Liberty Global, content, etc.

The beauty of this business is that even with minimal revenue growth, this stock can outperform.  I think the key is the gap between the yield and the debt cost.   As long as there is a spread, the team can re-invest the spreads into new products, geographies, or acquisitions.    The key strengths are access to content, lower cost of capital, and management team institutional knowledge with a clear playbook.   Lilak can use these strengths to buy competitors with 10x EBITDA (going rate for deals) and boost earnings to continue to keep the spread between yield and debt going. 

I don't know how to paste on this forum so I've added an attachment.     
Title: Re: LILA - Liberty Global Latin America tracker
Post by: marazul on December 28, 2017, 07:18:00 AM
One major issue is that LILA has subpar assets in some important markets. Too much mobile exposure in competitive markets and a high % of the wireline plant is copper based. Also, the company is overlevered. These issues were presnet before the unfortunate events at PR.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: no_free_lunch on December 28, 2017, 07:25:51 AM
I see C&W revenue as being up 2% y/y, chile is up 4-5% which is decent.  However they are pumping a lot into capex to get those numbers.  It just concerns me to focus on acquisitions when it doesn't seem that appealing on an organic basis.  If C&W starts putting out better results I would reconsider.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: fisch777 on December 28, 2017, 08:38:09 AM
The problem with roll-up strategy is your equity currency is not very valuable due to C&W deal disaster, so it is a self-inflicted and perpetuating problem.   They can't just borrow another turn or two with current leverage levels and stale cash flow growth.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on December 28, 2017, 10:43:04 AM
The problem with roll-up strategy is your equity currency is not very valuable due to C&W deal disaster, so it is a self-inflicted and perpetuating problem.   They can't just borrow another turn or two with current leverage levels and stale cash flow growth.

+1 to this comment. In my opinion acquisitions are the last thing LILA should be thinking about right now.

I also think it's important not to gloss over the tragic situation that Puerto Rico currently finds itself in. Pre-hurricane, PR was in the midst of a decade-long recession. Post-hurricane, hundreds of thousands of Puerto Ricans, many of them of prime working age, have already left the island for the mainland US. Many of them may never come back.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on December 29, 2017, 04:10:37 AM
The problem with roll-up strategy is your equity currency is not very valuable due to C&W deal disaster, so it is a self-inflicted and perpetuating problem.   They can't just borrow another turn or two with current leverage levels and stale cash flow growth.

+1 to this comment. In my opinion acquisitions are the last thing LILA should be thinking about right now.

I also think it's important not to gloss over the tragic situation that Puerto Rico currently finds itself in. Pre-hurricane, PR was in the midst of a decade-long recession. Post-hurricane, hundreds of thousands of Puerto Ricans, many of them of prime working age, have already left the island for the mainland US. Many of them may never come back.

I agree with above. PR may never come back fully. Also, when your stock is trading at 7x EBITDA doing acquisitions at 10x EBITDA does not make any sense. That is what LILA did with the CW acquisition a while ago and a big reason why the stock is in the doghouse.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Jurgis on January 05, 2018, 09:19:14 AM
What's with LILA showing up twice in Fido portfolio for last couple of days (there's LILA and there's G5480U138 which is LILA too)?

I'm happy with a quick double  :P but what the...?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: globalfinancepartners on January 05, 2018, 09:23:12 AM
Its because it isn't a tracking stock anymore.  Will take a few days for all the brokers to sort it out and stop double counting it.

What's with LILA showing up twice in Fido portfolio for last couple of days (there's LILA and there's G5480U138 which is LILA too)?

I'm happy with a quick double  :P but what the...?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on January 24, 2018, 01:03:29 PM
anyone know why LILAK is up 7.5% today? 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on January 24, 2018, 01:23:57 PM
anyone know why LILAK is up 7.5% today?

Maybe this?

https://www.army.mil/article-amp/199469/usace_prepa_announce_power_restored_to_more_than_1_million_customers

(h/t Shlomi Tsur )
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on January 24, 2018, 02:11:01 PM
Yeah maybe.  Thanks.

Seems an odd reaction. I mean they didn’t restore 1m homes overnight. But anyway, that’s the market!

Of course what’s most important is thaf  the homes are being restored with power out there! Can’t imagine the suffering.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 08, 2018, 07:33:33 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on February 08, 2018, 08:48:18 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs

Although PR is part of the US, it's over 1000 miles away from Florida and isn't a state. Nearly half of all Americans aren't aware that Puerto Ricans are US citizens. Similarly, Puerto Ricans look different and speak a different first language than do most Americans who live in the lower 48. See the Jones Act as an example of the US government being generally indifferent to the interests of PR.   

https://www.nytimes.com/2017/09/26/upshot/nearly-half-of-americans-dont-know-people-in-puerto-ricoans-are-fellow-citizens.html
 (https://www.nytimes.com/2017/09/26/upshot/nearly-half-of-americans-dont-know-people-in-puerto-ricoans-are-fellow-citizens.html)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 08, 2018, 08:52:27 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs

Although PR is part of the US, it's over 1000 miles away from Florida and isn't a state. Nearly half of all Americans aren't aware that Puerto Ricans are US citizens. Similarly, Puerto Ricans look different and speak a different first language than do most Americans who live in the lower 48. See the Jones Act as an example of the US government being generally indifferent to the interests of PR.   

https://www.nytimes.com/2017/09/26/upshot/nearly-half-of-americans-dont-know-people-in-puerto-ricoans-are-fellow-citizens.html
 (https://www.nytimes.com/2017/09/26/upshot/nearly-half-of-americans-dont-know-people-in-puerto-ricoans-are-fellow-citizens.html)

I know all that. Still doesn't seem like a good reason. But then, the same thing happened with New Orleans..
Title: Re: LILA - Liberty Global Latin America tracker
Post by: KJP on February 08, 2018, 09:06:23 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs

You don't need to be on an island 1,000 miles away to be forgotten about in the US:  https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty

 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rpadebet on February 08, 2018, 09:12:49 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs



You don't need to be on an island 1,000 miles away to be forgotten about in the US:  https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty

Do Puerto Rican's have a vote or elected representative for them in the US Congress? Does their vote matter in the Presidential elections? I suspect not, but then why not?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on February 08, 2018, 09:23:39 AM
I don't understand why the US seems to have forgotten about Puerto Rico...

Listen to this:

https://overcast.fm/+LHycafZNs



You don't need to be on an island 1,000 miles away to be forgotten about in the US:  https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty

Do Puerto Rican's have a vote or elected representative for them in the US Congress? Does their vote matter in the Presidential elections? I suspect not, but then why not?

The short answer is that residents of PR are nearly completely disenfranchised at the federal level.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on February 12, 2018, 03:14:37 PM
New acquisition:

https://seekingalpha.com/pr/17072486-liberty-latin-america-acquire-controlling-interest-cabletica
Title: Re: LILA - Liberty Global Latin America tracker
Post by: mike on February 12, 2018, 09:27:55 PM
New acquisition:

https://seekingalpha.com/pr/17072486-liberty-latin-america-acquire-controlling-interest-cabletica

Is it a good time to do another acquisition? Not sure they have digested the last acquisition.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on February 13, 2018, 04:19:39 AM
New acquisition:

https://seekingalpha.com/pr/17072486-liberty-latin-america-acquire-controlling-interest-cabletica

Is it a good time to do another acquisition? Not sure they have digested the last acquisition.

The 6.3x EBITDA price paid after synergies scares me. I would like to know what they paid before synergies. The fact that they don’t, tells me that it is probably too much.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on February 13, 2018, 05:30:01 AM
I look at this as a positive.  The thesis for me is that Malone has a proven playbook to execute in Lilak.    A big part of the playbook are acquisitions.     Lilak should be able to buy poorly run assets and turn it around quickly with lower costs (debt, programming, and capex) and better processes.  The fact that they already bought an asset shows me that they are getting reception in the Latin American marketplace.

The multiple on a poorly run asset is not significant as what they think they can get after the acquisition.   Lilak could be aggressive on their assumptions but as long as they are getting about 8x, I think it's fine.  Big picture I think we want Lilak to generate free cash flow and redeploy that capital and generate more cash flow.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: maybe4less on February 13, 2018, 09:29:47 AM
I look at this as a positive.  The thesis for me is that Malone has a proven playbook to execute in Lilak.    A big part of the playbook are acquisitions.     Lilak should be able to buy poorly run assets and turn it around quickly with lower costs (debt, programming, and capex) and better processes.  The fact that they already bought an asset shows me that they are getting reception in the Latin American marketplace.

The multiple on a poorly run asset is not significant as what they think they can get after the acquisition.   Lilak could be aggressive on their assumptions but as long as they are getting about 8x, I think it's fine.  Big picture I think we want Lilak to generate free cash flow and redeploy that capital and generate more cash flow.

The synergies are huge in telecom acquisitions, so it makes sense to focus on the post-synergies number. This is how the M&A game works in this sector, the acquirer and the acquiree effectively share the snyergies.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on February 13, 2018, 09:35:53 AM
I look at this as a positive.  The thesis for me is that Malone has a proven playbook to execute in Lilak.    A big part of the playbook are acquisitions.     Lilak should be able to buy poorly run assets and turn it around quickly with lower costs (debt, programming, and capex) and better processes.  The fact that they already bought an asset shows me that they are getting reception in the Latin American marketplace.

The multiple on a poorly run asset is not significant as what they think they can get after the acquisition.   Lilak could be aggressive on their assumptions but as long as they are getting about 8x, I think it's fine.  Big picture I think we want Lilak to generate free cash flow and redeploy that capital and generate more cash flow.

The synergies are huge in telecom acquisitions, so it makes sense to focus on the post-synergies number. This is how the M&A game works in this sector, the acquirer and the acquiree effectively share the snyergies.

Further, this is a consolidation vehicle. If you're not comfortable with the acquisition strategy, it's impossible to wrap your head around the stock. Part of any thesis requires comfort with management's ability to execute.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on February 13, 2018, 01:00:14 PM
The good:
- They're paying in cash + debt. A stock purchase would have been a disaster at the price LILA is currently being valued by the market.
- The founding family keeps a meaningful interest in the cables (20%) and full ownership of the content creation arm of their company. They've signed an exclusivity contract with LILA to keep distributing their channels. It sounds to me that interests are well aligned and that LILA Costa Rica will enjoy the benefits of controlling some of its content without bearing the risks of actually owning the production company.
- Costa Rica seems well run (and beautiful!).

The bad:
- I agree that to read only of the multiple post synergy is scary (although it's really low so we might just be actually getting an awesome deal, who knows). The other obscure footnote to me is the IFSR/GAAP discrepancy. I know it's normal since a Latin American asset gets bought by a US company but I wish they'd do the math BEFORE the transaction closes because that was one of the problems with CWC/Columbus.
- I agree that LILA is mostly a bet on management and that one has to be comfortable with believing in their best intention and that they still have the magic touch. I happen to be a believer but it's not a huge position for me either because there are many risks here.

Footnote nb3: Such financial information is in accordance with International Financial Reporting Standards (“IFRS”), as adjusted to include the capitalization of customer installation costs, which are expensed in accordance with Televisora’s IFRS accounting policies and will be capitalized in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Liberty Latin America has not completed its analysis of the differences between Liberty Latin America’s U.S. GAAP accounting policies and Televisora’s IFRS accounting policies with respect to Cabletica’s financial information.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Gordon Gecko on February 15, 2018, 12:36:11 PM
Any thoughts on earnings/call today?

Guidance seemed light, but PR sounded way ahead of most people's expectations.

Thoughts on PP&E adds as a % of sales? Seemed low given the reconstruction efforts. Maybe indicative of further deal flow? Or conversely, elevated competition and tight capital?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on February 16, 2018, 03:13:49 AM
I thought the overall conference call was solid.   Here are some positives and negatives I got out of the call.

Positive:
1.  Mgmt did a good job of allaying fears about Puerto Rico and other Hurricane impacted regions.  They mentioned that households will be reduced in Puerto Rico b/c of Hurricane and that they lost some customers BUT they also said that power is restored to many and Lilak is now producing positive OCF.  They also looked at the rebuilding as an oppty to gain market share and thus hope to at minimum be back to where they were before the Hurricane.  I think a lot of institutional money is holding back because of the impact of hurricanes.  I hope the call alleviated their concerns and they are open to buying Lilak again.
2.   M&A pipeline is solide.  Discussed how they can do acquisitions creatively.  For example, the recent deal is Costa Rica was a small equity check because they convinced the bank to finance most of the deal.     This was a BIG positive for me.   Positive b/c they have the expertise to structure deals that's win/win for them and the seller and do it with relatively little cash.    Also, just like a seller will be excited I think local banks/credit market will be excited to work with Lilak.
3.  The $1.4B OCF guidance does not include the potential $100M refund from the insurance claim.   This is upside.
4.  2018 OCF is weighed down b/c of hurricane impact.   I think the result is that 2019 will be an abnormally high growth rate.
5.  They will not use stock as a currency for M&A at this time.  They may use stock in the future.   My takeaway is that the stock price is too low right now.

Negative:
1.  They did not buy back shares in Q4.  They did not hint that they will buy back shares.   I thought this was kind of disappointing.   I got the sense that they prefer using cash flow to do acquisition than buy back shares.

Neutral:
The capex spending is 21% and that number is inclusive of the capex for the hurricane.  I don't know if this is a positive or negative. 

These are my takeaways.   I have a big position and thus I am biased.  Please take my comments with a grain of salt.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Gordon Gecko on February 16, 2018, 08:45:43 AM
@spark411 What do you make of guidance?

$1.4 isn't split out, so it's tough to back into anything. Seemed light given the price increases in JAM and T&T though, no? They're implementing a low-mid single digit across some of their larger territories and looking to exit the year w/ ~$170mm run rate OIBDA for PR.  $1.4 probably gets you to around 7.5x proportional OIBDA including fully synergized Teletica (netting minority payments)?

I think that's probably an OK multiple on what would (likely? Hopefully?) be a closer-to-trough earnings period in CWC. I don't think I could supersize a position here though. Any addtl thoughts?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on February 16, 2018, 06:53:09 PM
My thoughts on OCF are:

A.  We have a new company with a first time CEO.  The last thing they want to do is miss the 1st guidance they offer.   Guidance is "Greater than" $1.4B.   I think the guidance is conservative and they are giving a hint.

B.  As mentioned in the last post, there is an extra $100M cash from the insurance claims not in the guidance.

C.  I think the wild card is the hurricane affected regions.   How fast they ramp up OCF from those regions is out of Lilak's control i.e. power to the affected areas.  Because of this, I think they could not offer a solid guidance.

All in all, I think there is upside to the guidance and I hope they raise guidance throughout the year.   
Title: Re: LILA - Liberty Global Latin America tracker
Post by: flesh on February 17, 2018, 09:44:46 AM
2019 Will be a great year.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: maybe4less on February 17, 2018, 10:45:18 AM
My thoughts on OCF are:

A.  We have a new company with a first time CEO.  The last thing they want to do is miss the 1st guidance they offer.   Guidance is "Greater than" $1.4B.   I think the guidance is conservative and they are giving a hint.

I think this is right. Comments from Fries over the last year or so have led me to believe they have made a conscious decision to be much more conservative on guidance.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Shooter MacGavin on May 02, 2018, 07:57:05 PM
why'd the stock jump ~6% today?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 03, 2018, 12:27:49 PM
why'd the stock jump ~6% today?

My thought was that people are expecting earnings to be good after the hurricane basically wiped out 2017, and so are playing the earnings bounce, but I have no idea. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on May 08, 2018, 06:15:20 PM
http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on May 08, 2018, 06:59:14 PM
http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: jgyetzer on May 08, 2018, 07:42:42 PM
I agree that the consolidated numbers are a bummer, but if you look at each segment it looks like they are growing subscribers and revenues while investing heavily in C&W and VTR.  PR, while still negative compared to last year has dramatically improved since Q4 2017 which seems to suggest an inflection.  Short term there may be some pain, but then again it’s not priced with high expectations...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 08, 2018, 07:48:58 PM
http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

I didn't think it was all that bad.  Not much management can do to stop customers from leaving in Puerto Rico.  The area sucks now.  People have higher priorities than buying cable.  VTR and C & W grew 1% QoQ which is not great but not bad.  1.2 billion in ocf suggests a slightly higher leverage ratio than before, but not different than Charters at 5x.  Loss of mobile subs is worrying as mobile and cable are synergistic and you dont get the benfits if you cant scale the mobile.  I think at some point PR turns around and that adds a significant boost to ocf and its currently trading below Charters 9x ebitda before PR. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Og on May 08, 2018, 10:31:21 PM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on May 09, 2018, 04:23:54 AM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

No, it’s not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 09, 2018, 05:13:53 AM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

No, it’s not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Maybe there are holes in my argument, but I disagree.  VTR is number two in cable and number 7 or 8 in mobile in Chile.  Telefonica is number 1 in both.  With the convergence of mobile and cable this will cause problems in the future for players that arent telefonica. Especially with wireless broadband and small cells.  Why do you think VTR is trying to create a mobile business?  Vtr is probably best positioned other than telefonica, but American Movil is an 50 billion dollar company in chile and so is telefonica.  Basically all of Latin America is split between these two giants and AMX especially has both massive broadband (75 million RGUs) and massive mobile (300 million subs) operations all over mexico to argentina.  The only place where you dont really have to compete with either juggernaut very much is the caribbean, in part due to the shitty geography maybe (islands).  The main competitor here is digitel, which sort of like telephonica (but worse), is highly leveraged and you may be able to buy assets for cheap at the next downturn. Maybe you can complain about price and you certainly can over pay for quality assets, but this was probably the best stategic  decision for a  company in an oligopoly position. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on May 09, 2018, 06:24:04 AM
cameronfen-Great points.  I never saw the business from that strategic perspective.

I agree overall the numbers look good.  The decrease was mainly due to Puerto Rico. I thought the big news is that PR is almost 100% back online.  Thus the numbers should improve quickly.   Stock was whacked about 20% because the market seemed to think PR will never comp back.  I hope the combination of good OCF in areas other than PR and PR getting back on-line will bring the stock back up.

I love Vodafone looking to buy Liberty Global assets to do quadplay in Europe.   It seems that Malone is trying to do Quadplay from day one in Latin America.  Hope this means good asset appreciation long term.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 09, 2018, 07:06:00 AM
cameronfen-Great points.  I never saw the business from that strategic perspective.

I agree overall the numbers look good.  The decrease was mainly due to Puerto Rico. I thought the big news is that PR is almost 100% back online.  Thus the numbers should improve quickly.   Stock was whacked about 20% because the market seemed to think PR will never comp back.  I hope the combination of good OCF in areas other than PR and PR getting back on-line will bring the stock back up.

I love Vodafone looking to buy Liberty Global assets to do quadplay in Europe.   It seems that Malone is trying to do Quadplay from day one in Latin America.  Hope this means good asset appreciation long term.
Quadplay is an important synergy in terms of customer stickiness, however the main thing (in my mind) is with 5G all telecos will need cable infrastructure to small cells and, maybe less significantly, with wireless broadband, all cable companies will need macro towers in case of intermittent connection with the small cells (kind of like how your phone switches to 3G when 4G is not available). 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on May 09, 2018, 07:26:33 AM
Does anyone really want quadplay anymore in the US?  Or for that matter Europe or LatAM?

Lots of households have broadband and cellular.  That's it.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 09, 2018, 07:30:40 AM
Does anyone really want quadplay anymore in the US?  Or for that matter Europe or LatAM?

Lots of households have broadband and cellular.  That's it.
Right but even broadband and cellular is more sticky than just broadband (and getting cellular somewhere else). 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: afm408 on May 09, 2018, 12:35:12 PM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

No, it’s not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless. 

Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on May 09, 2018, 02:08:47 PM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

No, it’s not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless.

afm, I think you're looking at it the right way.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on May 09, 2018, 03:41:47 PM
You think it’s going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

I haven’t thought about simply removing the PR cash flow and debt from the equation. my guesstimate was from the recent 10-q $6.2B in debt -$500M in cash = $5.7B in net debt. Puerto Rico had close to $1B in debt ,so if you subtract 60% of this you get $600M in LILA share PR debt or a debt sans PR of $5.1B which seems close enough to your estimate.

I still think that LILA deserves only a lower multiple due to partly lower quality assets (prepaid wireless)higher cost of capital and just equal organic growth compared to CHTR (if that) and cash leakage ($300M for LILA if my notes are correct). I bought a starter early last year and it has been a steady drip of bad news with PR in fall being the culmination. LRBDY is almost the same, but not quite as bad. There is no reward for complexity in investing and everything being equal, simpler is better.

The results just suck - OCF down, FCF negative, leverage worrisome. I didn’t expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it won’t be enough of a difference to turn this around.

No, it’s not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on May 16, 2018, 07:05:15 AM
http://variety.com/2018/biz/news/atts-directv-latin-america-ipo-spinoff-vrio-1202720505/

Does the Vrio - T spinoff of DTV LatAm assets bring a new player into the LatAm rollup scenario?  Or since it's sat TV - does no one want it?

Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 16, 2018, 10:22:10 AM
http://variety.com/2018/biz/news/atts-directv-latin-america-ipo-spinoff-vrio-1202720505/

Does the Vrio - T spinoff of DTV LatAm assets bring a new player into the LatAm rollup scenario?  Or since it's sat TV - does no one want it?

I think spin was cancelled. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on May 24, 2018, 09:19:54 AM
Many think that the C&W acquisition at 12x EBITDA was high. In the recent quarterly earnings call, Lilak CEO says that they are utilizing less than 10% of the network capacity of the sub sea network from C&W acquisition. The 12x EBITDA does not factor in the upside of C&W's greatest asset i.e. sub sea network. Put another way, I think higher utilization of the sub sea network is a meaningful tailwind for Lilak that is being undervalues. Lilak CEO said sub sea network is being undervalued by the analyst community.

Would be interested to hear if anyone has thoughts on my line of thinking.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 24, 2018, 10:31:48 AM
Many think that the C&W acquisition at 12x EBITDA was high. In the recent quarterly earnings call, Lilak CEO says that they are utilizing less than 10% of the network capacity of the sub sea network from C&W acquisition. The 12x EBITDA does not factor in the upside of C&W's greatest asset i.e. sub sea network. Put another way, I think higher utilization of the sub sea network is a meaningful tailwind for Lilak that is being undervalues. Lilak CEO said sub sea network is being undervalued by the analyst community.

Would be interested to hear if anyone has thoughts on my line of thinking.

I think (and this is just someone without industry experience talking) the main advantage of the sub sea network is the moat.  In Central and Latin America the only place where America Movil have not really a significant presence in cable fixed line presence is the Caribbeans.  This is on top of there leading/monopoly position in mobile telecoms.    Probably the main reason is the necessity for the fixed line network.  I remember reading Cable Cowboys and remember one line where the biggest fear of the cable players was the telecoms getting into the business because of there massive resources.  In Latin America, Movil is like AT&T on steroids and Comcast combined.  IMO it is a huge benefit to not have to compete with them (at least on the broadband side). 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on May 24, 2018, 10:59:08 AM
Given the left leaning govts of most Caribbean islands and their govt sensitivity to monopolies - is this power exerciseable?

It seems not, but that under each country's telecom laws, most of the subsea fiber assets are highly regulated in pricing and availability to competitors.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: WayWardCloud on May 24, 2018, 01:35:59 PM
Many think that the C&W acquisition at 12x EBITDA was high. In the recent quarterly earnings call, Lilak CEO says that they are utilizing less than 10% of the network capacity of the sub sea network from C&W acquisition. The 12x EBITDA does not factor in the upside of C&W's greatest asset i.e. sub sea network. Put another way, I think higher utilization of the sub sea network is a meaningful tailwind for Lilak that is being undervalues. Lilak CEO said sub sea network is being undervalued by the analyst community.

Would be interested to hear if anyone has thoughts on my line of thinking.

John Malone was initially an owner of Columbus for that very reason (the undervalued subsea network) so you're probably right. He managed to get C&W to buy them at a very high valuation (13x?) then just a year later got LILA to buy the new C&W+Columbus entity at yet another insanely high valuation for an emerging countries based telco (12x, possibly worse with all the IFSR/GAAP tricks). He then crafted a complex deal offering that led LBTYA shareholders to favore the European assets during the spin-off while he on the other hand chose to get more of LILA. Finally, he bought a bunch of shares on the open market directly (which he very rarely does) but wrong timing because two hurricanes hit Puerto Rico a month later (Karma!!!)

I believe those 3 years have been all about Malone consolidating his Latin American assets under one roof, LILA, at the best possible price to HIM and he did so at the expense of both LBTYA and LILA shareholders with the complicity of Mike Fries. Not saying that the multiple paid for C&W will not some day turn out to still have been somewhat a good deal but I think it would be naive to believe that they fought as much as they should have in the transaction process given that Malone was essentially on both sides of the deal.

So the guy has clearly been a dick to his shareholders. I believe that's what creates today's opportunity. Now, at a depressed valuation of just around 6x because of all that murky past, we can get shares of a company that he clearly has a lot of faith in and finally get to enjoy well aligned interests.

Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on May 25, 2018, 04:04:53 AM
What is the moat around subsea fiber assets exactly? I don’t see one except for thr relatively high cost to pu thr fiber in place. Once in place, it is much cheaper to light up additional capacity than to build a new one, so that may be a deterrent. However, if a deep pocketed competitor comes in and has a few hundred million they invest, I am guessing he could just put in all the subsea fiber he wants.

It’s not like a last mile moat, where you have to dig up a few hundred thousand front yards to obtain connections.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: cameronfen on May 25, 2018, 04:19:13 AM
What is the moat around subsea fiber assets exactly? I don’t see one except for thr relatively high cost to pu thr fiber in place. Once in place, it is much cheaper to light up additional capacity than to build a new one, so that may be a deterrent. However, if a deep pocketed competitor comes in and has a few hundred million they invest, I am guessing he could just put in all the subsea fiber he wants.

It’s not like a last mile moat, where you have to dig up a few hundred thousand front yards to obtain connections.

It could be like the case of the railroads, where building one set of subsea fibers would be quite profitable, but another company duplicating these assets may not be worth it considering you would be competing with an incumbent player. 
Title: Re: LILA - Liberty Global Latin America tracker
Post by: jgyetzer on August 13, 2018, 09:24:31 AM
Anyone have an impression after the quarterly results?  Seemed that VTR and PR are going well. Lots of prepaid mobile loss with C&W but with encouraging broadband subscriber additions.  Decreased leverage compared to last quarter as well.

I assume most growth won’t flow through to financial statements in the form of free cash flow immediately but my impression is the market wants to see that and share repurchases rather than investment in growth.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on August 13, 2018, 09:42:11 AM
What is the moat around subsea fiber assets exactly? I don’t see one except for thr relatively high cost to pu thr fiber in place. Once in place, it is much cheaper to light up additional capacity than to build a new one, so that may be a deterrent. However, if a deep pocketed competitor comes in and has a few hundred million they invest, I am guessing he could just put in all the subsea fiber he wants.

It’s not like a last mile moat, where you have to dig up a few hundred thousand front yards to obtain connections.

It could be like the case of the railroads, where building one set of subsea fibers would be quite profitable, but another company duplicating these assets may not be worth it considering you would be competing with an incumbent player.

There's a sharp delta between the economics of the first mover and the second mover and every n'th mover thereafter due to the fact every incremental build splits the topline economics (and due to operating leverage there is a worse than linear relationship between the topline and bottom line) - especially where incumbents have excess capacity.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on August 13, 2018, 10:52:24 AM
What is the moat around subsea fiber assets exactly? I don’t see one except for thr relatively high cost to pu thr fiber in place. Once in place, it is much cheaper to light up additional capacity than to build a new one, so that may be a deterrent. However, if a deep pocketed competitor comes in and has a few hundred million they invest, I am guessing he could just put in all the subsea fiber he wants.

It’s not like a last mile moat, where you have to dig up a few hundred thousand front yards to obtain connections.

It could be like the case of the railroads, where building one set of subsea fibers would be quite profitable, but another company duplicating these assets may not be worth it considering you would be competing with an incumbent player.

There's a sharp delta between the economics of the first mover and the second mover and every n'th mover thereafter due to the fact every incremental build splits the topline economics (and due to operating leverage there is a worse than linear relationship between the topline and bottom line) - especially where incumbents have excess capacity.

FYI

https://www.deepbluecable.com/ (https://www.deepbluecable.com/)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on August 13, 2018, 06:50:15 PM
Earnings report:  Good - Chile VTR revenue and OCF up nicely.   PR doing the same.     Bad:  C&W revenue and OCF did not grow.   Main reason is the loss of mobile subscribers.    Loss is due to Digicel offering low prices to win share.  Looks like Lilak is willing to lose share rather than match unsustainable prices.

I think the shares are 50% of where they should be.  Depending on how you look at it, market gives no value to C&W and/or PR/Caribbean markets to come back to normal after hurricanes.    IMO there is a perception issue with institutional investors b/c of hurricanes and unless there is a huge splash in earnings, institutional investors will not drive prices higher.    Historically, John Malone forces the issue by buying back shares aggressively.   Unfortunately, Lilak does not have cash to buy back shares due to OCF drop in PR.   Currently debt is at 4.2x and CEO says that they want to stay in the low 4s.  With PR OCF getting back to normal state quickly and the need for capex to rebuild the network subsiding, LILA should be in financial position in a quarter or two to buy back shares and drive share price higher (if the market does not respond before then).

In regards to the moat of the subsea network, C&W has 50,000 km of cable.    Deep Blue Cable (backed by Digicel Owner) is trying to replicate but the network in km will be smaller.   Not only will a new cable require money, but building the network will take time and be challenging to get approvals from the multiple country municipalities.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: HalfMeasure on August 14, 2018, 06:08:11 AM
Earnings report:  Good - Chile VTR revenue and OCF up nicely.   PR doing the same.     Bad:  C&W revenue and OCF did not grow.   Main reason is the loss of mobile subscribers.    Loss is due to Digicel offering low prices to win share.  Looks like Lilak is willing to lose share rather than match unsustainable prices.

I think the shares are 50% of where they should be.  Depending on how you look at it, market gives no value to C&W and/or PR/Caribbean markets to come back to normal after hurricanes.    IMO there is a perception issue with institutional investors b/c of hurricanes and unless there is a huge splash in earnings, institutional investors will not drive prices higher.    Historically, John Malone forces the issue by buying back shares aggressively.   Unfortunately, Lilak does not have cash to buy back shares due to OCF drop in PR.   Currently debt is at 4.2x and CEO says that they want to stay in the low 4s.  With PR OCF getting back to normal state quickly and the need for capex to rebuild the network subsiding, LILA should be in financial position in a quarter or two to buy back shares and drive share price higher (if the market does not respond before then).

In regards to the moat of the subsea network, C&W has 50,000 km of cable.    Deep Blue Cable (backed by Digicel Owner) is trying to replicate but the network in km will be smaller.   Not only will a new cable require money, but building the network will take time and be challenging to get approvals from the multiple country municipalities.

Thanks Spark, that's a very succinct and cogent view of the situation. It seems like PR essentially set the company back a year, but it should be back on track now.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: GregS on August 14, 2018, 09:45:17 AM
Earnings report:  Good - Chile VTR revenue and OCF up nicely.   PR doing the same.     Bad:  C&W revenue and OCF did not grow.   Main reason is the loss of mobile subscribers.    Loss is due to Digicel offering low prices to win share.  Looks like Lilak is willing to lose share rather than match unsustainable prices.

I think the shares are 50% of where they should be.  Depending on how you look at it, market gives no value to C&W and/or PR/Caribbean markets to come back to normal after hurricanes.    IMO there is a perception issue with institutional investors b/c of hurricanes and unless there is a huge splash in earnings, institutional investors will not drive prices higher.    Historically, John Malone forces the issue by buying back shares aggressively.   Unfortunately, Lilak does not have cash to buy back shares due to OCF drop in PR.   Currently debt is at 4.2x and CEO says that they want to stay in the low 4s.  With PR OCF getting back to normal state quickly and the need for capex to rebuild the network subsiding, LILA should be in financial position in a quarter or two to buy back shares and drive share price higher (if the market does not respond before then).

In regards to the moat of the subsea network, C&W has 50,000 km of cable.    Deep Blue Cable (backed by Digicel Owner) is trying to replicate but the network in km will be smaller.   Not only will a new cable require money, but building the network will take time and be challenging to get approvals from the multiple country municipalities.

Agree with this summary.  FWIW, I think the market was starting to change its opinion of the stock last summer when Malone made his big purchase, but then the Hurricanes hit.  As HalfMeasure says, Puerto Rico set the company back a year.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: tefl0n on August 17, 2018, 12:21:25 PM
Any thoughts on why the A shares (with voting rights) are cheaper than the C's (no votes)?
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Liberty on August 17, 2018, 12:23:04 PM
Any thoughts on why the A shares (with voting rights) are cheaper than the C's (no votes)?

The usual explanation is lower liquidity.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Spekulatius on August 18, 2018, 04:41:36 AM
So, how much are the effects of the PR hurricane hit still impacting the results? I get about $20M in OCF and $30M in Capex spent. FCF was -$15M last quarter, so we get $35M/ quarter?  Revenues going up 2% vs -2%? Not exactly enticing. Next quarter, we get negative currency effects from the strong US$. At least the Hurricane season this year is below normal, so with a bit of luck, nothing in the Caribbean gets hit.
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on August 24, 2018, 05:40:38 AM
2 websites I found were interesting and relevant to Lilak investment.
2 takeaways.
A) American Movil is a competitor to Lilak. Especially in Chile. I will start watching American Movil to see how the overall latin american telecom market is doing.
B) Latin America's broadband is growing fast which bodes well for Lilak's long term growth.

https://blog.telegeography.com/latin-americas-broadband-sector-continues-its-growth

https://seekingalpha.com/article/4188464-america-movil-sa-de-cv-2018-q2-results-earnings-call-slides
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on August 25, 2018, 03:36:59 AM
CFO buying 20K shares.    Good to see insider buying.

http://phoenix.corporate-ir.net/phoenix.zhtml?c=254680&p=IROL-sec
Title: Re: LILA - Liberty Global Latin America tracker
Post by: spark411 on August 28, 2018, 05:59:14 AM
CEO buys $2M worth of stock.   2 days in a row of insiders buying...
Title: Re: LILA - Liberty Global Latin America tracker
Post by: Foreign Tuffett on September 13, 2018, 12:07:56 PM
Digicel is turning into a digi-dumpster fire. One would think that their massive debt load may hamstring their ability to be competitive.

https://www.irishtimes.com/business/technology/digicel-s-cfo-shows-he-s-mobile-1.3611723 (https://www.irishtimes.com/business/technology/digicel-s-cfo-shows-he-s-mobile-1.3611723)

https://www.irishtimes.com/business/technology/digicel-seeks-to-ease-debt-burden-with-bond-switch-offer-1.3613842 (https://www.irishtimes.com/business/technology/digicel-seeks-to-ease-debt-burden-with-bond-switch-offer-1.3613842)
Title: Re: LILA - Liberty Global Latin America tracker
Post by: rogermunibond on October 17, 2018, 06:55:17 AM
https://finance.yahoo.com/news/liberty-latin-america-acquires-remaining-123000411.html

Buying out Cablevision stake with shares.